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Broadcom launches takeover bid for Emulex

Posted: 23 Apr 2009 ?? ?Print Version ?Bookmark and Share

Keywords:Emulex acquisition? Broadcom takeover bid? Ethernet?

Broadcom Corp. has made a proposal to the Emulex Corp. Board of Directors to acquire all the outstanding shares of Emulex common stock for $9.25 per share in cash, representing a total equity value of approximately $764 million. The offer represents a 40 percent premium above the closing price of Emulex common stock on April 20, a 62 percent premium to trailing 30 day average price per share and an approximately 85 percent premium to enterprise value.

Broadcom believes that its know-how in Ethernet networking, together with Emulex's expertise in Fibre Channel storage networking, will enable the combined company to accelerate the development of converged solutions for enterprise networks.

According to Broadcom, the combination offers compelling benefits to shareholders, customers and employees of both companies. The merger will accelerate the vision of network conversion, which promises significant benefits to customers and the industry. Broadcom also the deal will create shareholder value for both companies. Broadcom also expects to increase both companies' revenue growth through an improved ability to innovate next-generation solutions for customers of both companies, as well as broadening the distribution channels for each company's products.

Broadcom's cash offer will be funded from its approximately $2 billion of existing cash and marketable securities on hand, with the fundamentals of Broadcom's capital position remaining strong.

Complementary businesses
Scott A. McGregor, president and CEO of Broadcom, said, "This combination is strategically compelling and provides significant value to the shareholders of both companies. A combination of Broadcom and Emulex addresses our customers' growing need to apply the economics of Ethernet to the Fibre Channel storage space to achieve low-cost network converged solutions."

McGregor added that the logical evolution of the enterprise network is for a transition to a converged fabric architecture that incorporates a broad array of technologies. "Our combined entity can be a one-stop shop for key networking and storage technologies for the enterprise and for our industry. Our preference is to proceed in a friendly, collaborative manner, and we hope that Emulex's Board will see the merits of this combination and appreciate the substantial value being offered to its shareholders," he said.

In addition, the combination of Broadcom and Emulex is highly complementary, with little customer or product overlap and compatible workforces. Both companies have highly-skilled engineering employees with expertise in different product areas. Emulex's employees would benefit from the ability to utilize Broadcom's vast intellectual property, engineering resources and substantial R&D scale. Broadcom's employees would benefit from Emulex's strong position and expertise within the storage market for host bus adapters and diversified channels.

Broadcom expects the operational integration of Broadcom and Emulex to be highly achievable, given the complementary nature of the companies' businesses.

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