Broadcom Makes a Play for Emulex

Arthur Cole

Merger seasons seems to be hitting full swing -- influenced both by sluggish returns that are lowering valuations for many high-tech firms and expectations that the economy will pull out of its swoon by next year.

The latest offer on the table is Broadcom's $764 million bid for Emulex, developer of enterprise networking solutions. The proposal would give Emulex owners $9.25 per share of common stock, which is about 40 percent higher than yesterday's close.

Broadcom is clearly interested in Emulex' expertise in converged networking solutions, particularly the company's new line of converged network adapters that are likely to play a crucial role as enterprises look to merge disparate network topologies into one.

Emulex, for its part, is playing it cagey, issuing a statement acknowledging the offer, but saying it will look it over "in due course" with its financial and legal advisors (Goldman Sachs and Gibson, Dunn & Croucher, respectively). It also noted that "there is no need for Emulex stockholders to take any action at this time."

Both companies apparently have been talking merger for some time, but negotiations fell through earlier this year, causing Broadcom to make an unsolicited offer. Emulex is said to have a "poison pill" in place to guard against such an offer, but it remains to be seen whether the company's directors will put it in action.

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