SAN JOSE, Calif. -- After making several offers to buy Emulex Corp., Broadcom Corp. said it would cease all efforts to acquire the networking company.
Broadcom reiterated that its all-cash $11-per-share offer, announced on June 29, is the best offer it intends to make. Broadcom said it will allow its previously announced tender offer for Emulex stock to expire on July 14.
In April, Broadcom (Irvine, Calif. ) made an unsolicited bid to acquire storage-equipment maker Emulex for $9.25 per share in cash or $764 million.
Broadcom made the bid for good reason. It grabbed the lead in the market for Ethernet chips for servers at the Gbit generation, but it has no shipping Fibre Channel chips or software or board-level products of any kind today. Emulex has all three.
Still, Emulex dismissed the bid. Broadcom boosted the offer several times, but Emulex rejected those bids as well.
Late last month, Broadcom sweetened its offer for Emulex, jacking up its bid 19 percent as part of a concerted effort to win the support of Emulex's management and board of directors.
At the time, Broadcom, which on April 21 first offered to pay $9.25 per share for Emulex, said it has also agreed to terminate a lawsuit it instituted against Emulex and will stop soliciting shareholders to change the company's bylaws, a move it initiated after encountering stiff management opposition to the acquisition offer.
The Irvine, Calif.-based communication IC vendor appears to have concluded it would not be able to win enough support from Emulex' shareholders after the management voiced strong objection to the offer, contending that the bid was too low.
Thursday, Broadcom finally dropped the offer. "As we stated in our letter of June 29, 2009 to the Emulex board, we believe it is in the interest of each company's stakeholders to complete a transaction expeditiously or to move on," said Scott McGregor, president and chief executive of Broadcom, in a statement.
"Although we were unable to negotiate an expeditious and friendly transaction at a price that makes sense to us given the expectations set by the Emulex Board, there are other value-creating alternatives that we will now turn our attention to as we position Broadcom to capitalize on the emerging opportunities in the converged enterprise networking markets,"
he added.
Because of Emulex's rejection, coupled with its previous adoption of a poison pill and other revisions made to its corporate bylaws in January 2009, Broadcom does not expect that the conditions to close its tender offer will be satisfied by July 14, and Broadcom does not intend to waive any of these conditions.
Assuming that the conditions are not satisfied on or before July 14, Broadcom will not accept for payment any shares that have been tendered and will return those shares as promptly as practicable after the tender offer expires.
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