Broadcom commences all cash tender offer to purchase Emulex shares

IRVINE, USA: Broadcom Corp. today announced that its wholly owned subsidiary, Fiji Acquisition Corporation, has commenced a tender offer for all the outstanding shares of common stock of Emulex Corp. In addition, Broadcom announced the filing of a preliminary consent solicitation statement to amend Emulex's Bylaws to allow stockholders to call a special meeting of stockholders.

Under the terms of the offer, Emulex stockholders would receive $9.25 net per share in cash (less any applicable withholding taxes and without interest). This represents a total equity value of approximately $764 million. The offer is:

* A 62-percent premium to Emulex's average closing stock price for the 30 trading days immediately prior to Broadcom's public offer to acquire Emulex announced on April 21, 2009;
* A 42-percent premium over the median 12-month stock price target published by research analysts as of April 20, 2009;
* A 40-percent premium over the closing price of Emulex common stock on April 20, 2009; and
* An approximately 85-percent premium over Emulex's enterprise value as of the closing price of Emulex common stock on April 20, 2009.

Unless extended, the tender offer is scheduled to expire at midnight, Eastern time, on Wednesday, June 3, 2009.

Scott A. McGregor, President and CEO of Broadcom, said: "We are disappointed by Emulex Corporation's rejection of Broadcom's proposal which would deliver substantial, immediate and highly certain value to Emulex's stockholders, while further providing significant benefits to customers and employees alike. The Emulex Board's response on Monday and its continued unwillingness to engage in discussions with Broadcom are clearly not in the best interests of either its stockholders or its customers. This intransigence could cause needless delay in efforts to combine our two companies, leading to further deterioration of Emulex's market share and stockholder value."

"Emulex's Board has taken steps, including the adoption of a 'poison pill' and the imposition of bylaw amendments, to erect barriers to stockholders' ability to express their will as owners of Emulex," continued McGregor. "While we much prefer to arrive at a negotiated agreement with Emulex, the Emulex Board has left us with no choice but to ask Emulex stockholders to call for a special meeting of stockholders so that they can consider the merits of our offer for themselves."

Broadcom said that while Emulex has touted its "design wins" in its response to Broadcom and in other communications with the financial community, it has failed to demonstrate an ability to convert design wins into either revenue growth or market share. Over the last several years, including this most recent quarter, Emulex has continued to lose share to its larger competitor.

In fact, in its most recent quarter, Emulex's revenue fell short of analysts' consensus expectations, and the midpoint of Emulex's revenue guidance for the June 2009 quarter implies that Emulex is likely to deliver its 6th quarter of sequential revenue decline. In addition, Emulex's primary competitor said last week that it continued to gain share in key markets during the most recent quarter, after achieving record net revenues in 2008.

Broadcom also noted that while Emulex contends long-term value creation opportunities might exist on a standalone basis, recently revised analyst models exhibit less optimism regarding its future prospects --- consensus analyst estimates for Emulex's revenues in calendar year 2009 and 2010 were lowered following Emulex's April 27 earnings release and guidance update, suggesting that Emulex's future standalone opportunities amid increased competition remain highly uncertain.

"Emulex has made it clear that it shares our view that the convergence of data and storage networking is the long-term future of enterprise networks. This combination would enable us to accelerate our efforts to bring this vision to our customers. We believe the logic of this combination is equally compelling for the employees of both companies. In particular Emulex's highly skilled employees would have greater opportunities to enhance their careers as a result of access to Broadcom's Ethernet portfolio, our intellectual property and tools and the enhanced sales, service and manufacturing support our greater scale makes possible," McGregor said.

Broadcom's all-cash offer is not subject to a financing condition. Broadcom intends to fund the offer with its existing cash holdings. The offer is subject to certain conditions described in the tender offer statement filed with the U.S. Securities and Exchange Commission, a copy of which will be mailed to Emulex's stockholders.

Broadcom also today filed a preliminary consent solicitation statement with the U.S. Securities and Exchange Commission. It solicits stockholders' consent for certain amendments to Emulex's Bylaws (including allowing Emulex stockholders holding 10% or more of the shares outstanding of Emulex to call a special meeting of stockholders), consent for appointment of representatives of Broadcom as stockholders' agents for purposes of calling a special meeting of the stockholders of Emulex and consent for repealing any amendments of Emulex's Bylaws adopted by its Board of Directors on or after January 15, 2009.