IRVINE, USA: Broadcom Corp., in response to the rejection by the Board of Directors of Emulex Corp. of its proposal to enter into friendly discussions toward a negotiated transaction, said it would cease all efforts to acquire Emulex.
Broadcom reiterated that its all-cash $11-per-share offer, announced on June 29, 2009, is the best offer it intends to make. Broadcom said it will allow its previously announced tender offer for Emulex stock to expire at midnight Eastern Time on July 14, 2009.
"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 A. McGregor, President and CEO of Broadcom.
"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."
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, 2009, and Broadcom does not intend to waive any of these conditions.
Assuming that the conditions are not satisfied on or before July 14, 2009, 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.
Showing posts with label Emulex. Show all posts
Showing posts with label Emulex. Show all posts
Friday, July 10, 2009
Emulex board unanimously rejects Broadcom's offer
COSTA MESA, USA: Emulex Corp. announced that its Board of Directors has responded to the revised offer by Broadcom Corp. to acquire Emulex for $11.00 per share in cash, and unanimously rejected the offer.
After a thorough review of the Broadcom revised offer with the assistance of its financial and legal advisors, Goldman Sachs & Co. and Gibson, Dunn & Crutcher LLP, respectively, the Board determined that the offer significantly undervalues Emulex's long-term prospects, is inadequate, and is not in the best interests of Emulex and its stockholders.
The Board therefore recommends that Emulex stockholders not tender their shares into the offer. The Company also announced preliminary financial results for the fourth fiscal quarter ended June 28, 2009 at the high end of its guidance, and four new tier-one original equipment manufacturer (OEM) product design wins.
"Throughout our review of Broadcom's offers, the Board has been focused first and foremost on serving the best interests of Emulex stockholders," said Paul Folino, Executive Chairman.
"We unanimously believe Emulex will deliver significantly more value than Broadcom's revised offer through the Company's rapidly developing converged networking business and solid execution in our host server and embedded storage markets.
While the Board is very enthusiastic about Emulex's future prospects and will continue to focus on executing the Company's current strategy, consistent with the Board's fiduciary duties we would of course give full consideration to a bona fide offer from any party that reflects the full value of the Company."
Jim McCluney, President and CEO, said, "Underscoring the success of our strategic initiatives, we recently secured two new tier-one 10Gb/s Ethernet OneConnect Converged Network Adapter design wins, adding to the twelve wins that we disclosed in May.
In recent weeks, we also secured two new OEM design wins for our LightPulse Fibre Channel Host Bus Adapters. These new design wins further validate our projections of $600 million in revenue and $1.45 in non-GAAP earnings per share in fiscal year 2012, and reinforce the additional upside opportunities available to the Company.
We are also pleased to announce today preliminary revenue and fully diluted EPS results for the fourth quarter that are at the high end of our guidance. We believe this solid performance demonstrates our ability to execute against our guidance.
"Emulex today announced that it preliminarily expects to report revenues of approximately $78 - $79 million for its fourth fiscal quarter ended June 28, 2009, compared to the range of $73 - $80 million projected in April 2009 during the Company's third quarter conference call. The Company preliminarily expects non-GAAP earnings per share for its fourth fiscal quarter to be at the high end of the prior guidance of $0.01 - $0.05 per diluted share.
After a thorough review of the Broadcom revised offer with the assistance of its financial and legal advisors, Goldman Sachs & Co. and Gibson, Dunn & Crutcher LLP, respectively, the Board determined that the offer significantly undervalues Emulex's long-term prospects, is inadequate, and is not in the best interests of Emulex and its stockholders.
The Board therefore recommends that Emulex stockholders not tender their shares into the offer. The Company also announced preliminary financial results for the fourth fiscal quarter ended June 28, 2009 at the high end of its guidance, and four new tier-one original equipment manufacturer (OEM) product design wins.
"Throughout our review of Broadcom's offers, the Board has been focused first and foremost on serving the best interests of Emulex stockholders," said Paul Folino, Executive Chairman.
"We unanimously believe Emulex will deliver significantly more value than Broadcom's revised offer through the Company's rapidly developing converged networking business and solid execution in our host server and embedded storage markets.
While the Board is very enthusiastic about Emulex's future prospects and will continue to focus on executing the Company's current strategy, consistent with the Board's fiduciary duties we would of course give full consideration to a bona fide offer from any party that reflects the full value of the Company."
Jim McCluney, President and CEO, said, "Underscoring the success of our strategic initiatives, we recently secured two new tier-one 10Gb/s Ethernet OneConnect Converged Network Adapter design wins, adding to the twelve wins that we disclosed in May.
In recent weeks, we also secured two new OEM design wins for our LightPulse Fibre Channel Host Bus Adapters. These new design wins further validate our projections of $600 million in revenue and $1.45 in non-GAAP earnings per share in fiscal year 2012, and reinforce the additional upside opportunities available to the Company.
We are also pleased to announce today preliminary revenue and fully diluted EPS results for the fourth quarter that are at the high end of our guidance. We believe this solid performance demonstrates our ability to execute against our guidance.
"Emulex today announced that it preliminarily expects to report revenues of approximately $78 - $79 million for its fourth fiscal quarter ended June 28, 2009, compared to the range of $73 - $80 million projected in April 2009 during the Company's third quarter conference call. The Company preliminarily expects non-GAAP earnings per share for its fourth fiscal quarter to be at the high end of the prior guidance of $0.01 - $0.05 per diluted share.
Wednesday, July 1, 2009
Emulex advises stockholders to take no action to revised Broadcom tender offer
COSTA MESA, USA: Emulex Corp. said that its Board of Directors, consistent with its fiduciary duties and with the assistance of its financial and legal advisors, Goldman, Sachs & Co. and Gibson, Dunn & Crutcher LLP, respectively, will review the terms of the revised tender offer from Broadcom Corp. to acquire all of the outstanding Emulex shares for $11.00 per share in cash.
Broadcom's previous offer was $9.25 per share in cash. The Emulex Board will make its recommendation to stockholders on the revised tender offer in due course. The Company urges stockholders at this time not to tender any shares into the revised offer pending the Board's recommendation.
Emulex noted that Broadcom stated in their announcement that Broadcom dropped its consent solicitation without delivering any consents and that Broadcom has also filed a notice of dismissal of its Delaware litigation against Emulex and the Emulex Board of Directors.
Emulex stockholders with any questions about the tender offer or other related matters may contact MacKenzie Partners, Inc. at 1-800-322-2885.
Broadcom's previous offer was $9.25 per share in cash. The Emulex Board will make its recommendation to stockholders on the revised tender offer in due course. The Company urges stockholders at this time not to tender any shares into the revised offer pending the Board's recommendation.
Emulex noted that Broadcom stated in their announcement that Broadcom dropped its consent solicitation without delivering any consents and that Broadcom has also filed a notice of dismissal of its Delaware litigation against Emulex and the Emulex Board of Directors.
Emulex stockholders with any questions about the tender offer or other related matters may contact MacKenzie Partners, Inc. at 1-800-322-2885.
Tuesday, June 30, 2009
Broadcom raises Emulex offer to $11.00 per share
IRVINE, USA: Broadcom Corp. announced that it raised its tender offer for all of the currently outstanding shares of common stock (including the associated preferred stock purchase rights) of Emulex Corp. from $9.25 to $11.00 per share in cash, representing a total equity value of approximately $912 million.
As required by law, Broadcom will extend its tender offer for an additional 10 business days, until midnight New York City time, July 14, 2009.
This is the best offer Broadcom intends to make, reflecting Broadcom's assessment of the publicly available information on Emulex and the value Broadcom anticipates to itself from an expedited transaction.
The offer represents a premium of 66 percent to Emulex's closing stock price on April 20, 2009, the day before Broadcom announced its initial offer; of 93 percent to the average closing price for the 30 trading days before Broadcom's initial offer; of approximately 149 percent to Enterprise Value on the day before Broadcom's initial offer; of 69 percent to the analysts' median 12-month price target for Emulex on the day before Broadcom's initial offer.
Broadcom recognizes that, in the absence of its offer, Emulex's share price would have continued to fluctuate in the two months since Broadcom's initial offer. Had the Emulex stock traded in line with the stock of its closest peer, QLogic Corp. (up 7.6 percent since April 20, 2009), it would be $7.11 today. Broadcom's revised offer represents a premium to this implied current share price of 55 percent.
As required by law, Broadcom will extend its tender offer for an additional 10 business days, until midnight New York City time, July 14, 2009.
This is the best offer Broadcom intends to make, reflecting Broadcom's assessment of the publicly available information on Emulex and the value Broadcom anticipates to itself from an expedited transaction.
The offer represents a premium of 66 percent to Emulex's closing stock price on April 20, 2009, the day before Broadcom announced its initial offer; of 93 percent to the average closing price for the 30 trading days before Broadcom's initial offer; of approximately 149 percent to Enterprise Value on the day before Broadcom's initial offer; of 69 percent to the analysts' median 12-month price target for Emulex on the day before Broadcom's initial offer.
Broadcom recognizes that, in the absence of its offer, Emulex's share price would have continued to fluctuate in the two months since Broadcom's initial offer. Had the Emulex stock traded in line with the stock of its closest peer, QLogic Corp. (up 7.6 percent since April 20, 2009), it would be $7.11 today. Broadcom's revised offer represents a premium to this implied current share price of 55 percent.
Friday, June 5, 2009
Emulex comments on Broadcom's self-serving and misleading statements
COSTA MESA, USA: Emulex Corp. President and Chief Executive Officer, Jim McCluney, today commented on statements and presentation materials issued yesterday by Broadcom Corp.
"Broadcom's nearly 50 pages of documents issued yesterday are littered with misleading statements and mischaracterizations meant to distract Emulex stockholders from the core issues of value and leverage. We urge stockholders to see through Broadcom's rhetoric and concentrate on what we believe are the facts -- Broadcom's tender offer is inadequate and their related consent solicitation aims to capture leverage over Emulex stockholders by ultimately seeking to replace Emulex's Board with hand-picked Broadcom nominees who we believe, if elected, will pursue Broadcom's self serving agenda of acquiring Emulex on-the-cheap to the detriment of Emulex's stockholders. Giving Broadcom a consent is giving them leverage with no benefit to stockholders. Why call a special meeting to facilitate a grossly inadequate offer?"
"The key issue for stockholders to consider is that Emulex is well positioned for significant and rapid growth through our leadership in the converged networking market. We are securing design wins, in many cases against Broadcom, which is threatening their current and future Ethernet business. We believe Broadcom has now made it clear that they recognize this problem. In our view, Broadcom is simply attempting to mitigate the damage to its business and capture the significant future value that rightly belongs to all Emulex stockholders.
"In fact, at a June 3 analyst conference, Broadcom's CEO Scott McGregor admitted what Emulex has said all along, that Broadcom simply cannot compete effectively in converged networking without making an acquisition. More importantly, McGregor said that Broadcom recognizes that its 'best option' is to buy Emulex, underscoring Emulex's significant future prospects and value creation opportunities through our current strategy. We note that this acknowledgement is a marked change from the misleading statements Broadcom used initially upon launching their offer to suggest that they could just as easily build their way into converged networking."
"At the June 3 conference, McGregor stated that Broadcom's only alternatives outside an acquisition of an established Fibre Channel market participant are either to do nothing, or organically build a Fibre Channel offering and then try to harden it if an OEM agrees to use it. However, McGregor admitted that doing nothing could result in significant lost opportunity across 'five' to 'ten years' and building something would at minimum require 'dilutive' spending on R&D over a number of years. Even if the R&D effort was successful in creating an offering, we believe Broadcom would be too late to the market to compete effectively against an established incumbent with strong OEM relationships and a third or fourth generation offering."
"The materials filed yesterday by Broadcom continue their pattern of making misleading statements. As an example, Broadcom continues to talk about what they believe is an 'attractive' implied premium of their offer despite knowing well that (a) Emulex's stock price at the time of their offer did not reflect the long-term significant value of the Company's numerous new yet undisclosed to the public design wins and strong positioning in the converged networking market, and (b) given considerable recent recovery in the broader markets and in the valuations of our comparables, Emulex would likely be currently trading at a much higher valuation on fundamentals than when Broadcom first made their offer on April 21.
"We believe our stockholders clearly recognize that Broadcom's hostile takeover attempt is opportunistic and unacceptable, as evidenced by the meager less than three percent of outstanding shares tendered into the offer to-date."
"The Board is focused on delivering value and will continue to take actions it believes are in the best interests of stockholders. We continue to strongly urge our stockholders to NOT TENDER into the grossly inadequate offer and to NOT CONSENT to the bylaw amendments that will decrease Emulex's leverage. We appreciate our stockholders' support and look forward to continuing our dialogue with them regarding Broadcom's statements and what we believe are the true facts."
To reject Broadcom's tender offer, Emulex stockholders do NOT need to take any action. Similarly, to reject Broadcom's consent solicitation, stockholders do NOT need to take any action on Broadcom's GOLD consent card. Instead, Emulex stockholders should sign and return Emulex's WHITE consent revocation card when available, which will enable the Company to keep informed of stockholder sentiment.
"Broadcom's nearly 50 pages of documents issued yesterday are littered with misleading statements and mischaracterizations meant to distract Emulex stockholders from the core issues of value and leverage. We urge stockholders to see through Broadcom's rhetoric and concentrate on what we believe are the facts -- Broadcom's tender offer is inadequate and their related consent solicitation aims to capture leverage over Emulex stockholders by ultimately seeking to replace Emulex's Board with hand-picked Broadcom nominees who we believe, if elected, will pursue Broadcom's self serving agenda of acquiring Emulex on-the-cheap to the detriment of Emulex's stockholders. Giving Broadcom a consent is giving them leverage with no benefit to stockholders. Why call a special meeting to facilitate a grossly inadequate offer?"
"The key issue for stockholders to consider is that Emulex is well positioned for significant and rapid growth through our leadership in the converged networking market. We are securing design wins, in many cases against Broadcom, which is threatening their current and future Ethernet business. We believe Broadcom has now made it clear that they recognize this problem. In our view, Broadcom is simply attempting to mitigate the damage to its business and capture the significant future value that rightly belongs to all Emulex stockholders.
"In fact, at a June 3 analyst conference, Broadcom's CEO Scott McGregor admitted what Emulex has said all along, that Broadcom simply cannot compete effectively in converged networking without making an acquisition. More importantly, McGregor said that Broadcom recognizes that its 'best option' is to buy Emulex, underscoring Emulex's significant future prospects and value creation opportunities through our current strategy. We note that this acknowledgement is a marked change from the misleading statements Broadcom used initially upon launching their offer to suggest that they could just as easily build their way into converged networking."
"At the June 3 conference, McGregor stated that Broadcom's only alternatives outside an acquisition of an established Fibre Channel market participant are either to do nothing, or organically build a Fibre Channel offering and then try to harden it if an OEM agrees to use it. However, McGregor admitted that doing nothing could result in significant lost opportunity across 'five' to 'ten years' and building something would at minimum require 'dilutive' spending on R&D over a number of years. Even if the R&D effort was successful in creating an offering, we believe Broadcom would be too late to the market to compete effectively against an established incumbent with strong OEM relationships and a third or fourth generation offering."
"The materials filed yesterday by Broadcom continue their pattern of making misleading statements. As an example, Broadcom continues to talk about what they believe is an 'attractive' implied premium of their offer despite knowing well that (a) Emulex's stock price at the time of their offer did not reflect the long-term significant value of the Company's numerous new yet undisclosed to the public design wins and strong positioning in the converged networking market, and (b) given considerable recent recovery in the broader markets and in the valuations of our comparables, Emulex would likely be currently trading at a much higher valuation on fundamentals than when Broadcom first made their offer on April 21.
"We believe our stockholders clearly recognize that Broadcom's hostile takeover attempt is opportunistic and unacceptable, as evidenced by the meager less than three percent of outstanding shares tendered into the offer to-date."
"The Board is focused on delivering value and will continue to take actions it believes are in the best interests of stockholders. We continue to strongly urge our stockholders to NOT TENDER into the grossly inadequate offer and to NOT CONSENT to the bylaw amendments that will decrease Emulex's leverage. We appreciate our stockholders' support and look forward to continuing our dialogue with them regarding Broadcom's statements and what we believe are the true facts."
To reject Broadcom's tender offer, Emulex stockholders do NOT need to take any action. Similarly, to reject Broadcom's consent solicitation, stockholders do NOT need to take any action on Broadcom's GOLD consent card. Instead, Emulex stockholders should sign and return Emulex's WHITE consent revocation card when available, which will enable the Company to keep informed of stockholder sentiment.
Expiration date for Emulex offer extended to June 17, 2009
IRVINE, USA: Broadcom Corp. announced that Fiji Acquisition Corp. has extended its tender offer for all of the currently outstanding shares of common stock (including the associated preferred stock purchase rights) of Emulex Corp. to 11:59 pm, New York City time, on June 17, 2009, unless further extended. The tender offer was previously set to expire at 12:00 midnight, New York City time, on June 3, 2009.
"We believe our all-cash offer of $9.25 net per share reflects a full and fair price for Emulex common stock. It represents a 40 percent premium to the closing price of Emulex common stock on April 20, 2009, the day before Broadcom made public its offer, and a 62 percent premium to the average price of Emulex for the 30 trading days ending on April 20, 2009," said Scott A. McGregor, President and Chief Executive Officer of Broadcom.
As of 6:00 pm, New York City time, on Wednesday, June 3, 2009, approximately 2,267,882 shares of Emulex had been tendered in and not withdrawn from the tender offer.
The complete terms and conditions of the tender offer are set forth in the Offer to Purchase and related Letter of Transmittal, copies of which are available by contacting the Information Agent for the tender offer, Innisfree M&A Inc.
"We believe our all-cash offer of $9.25 net per share reflects a full and fair price for Emulex common stock. It represents a 40 percent premium to the closing price of Emulex common stock on April 20, 2009, the day before Broadcom made public its offer, and a 62 percent premium to the average price of Emulex for the 30 trading days ending on April 20, 2009," said Scott A. McGregor, President and Chief Executive Officer of Broadcom.
As of 6:00 pm, New York City time, on Wednesday, June 3, 2009, approximately 2,267,882 shares of Emulex had been tendered in and not withdrawn from the tender offer.
The complete terms and conditions of the tender offer are set forth in the Offer to Purchase and related Letter of Transmittal, copies of which are available by contacting the Information Agent for the tender offer, Innisfree M&A Inc.
Wednesday, May 6, 2009
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.
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.
Tuesday, May 5, 2009
Emulex board unanimously rejects Broadcom's proposal
COSTA MESA, USA: Emulex Corp. announced that its Board of Directors, with the assistance of its financial and legal advisors, has completed its evaluation of the unsolicited, non-binding proposal received on April 21, 2009 from Broadcom Corp. to acquire Emulex for $9.25 per share in cash and has unanimously determined that the Broadcom proposal significantly undervalues Emulex and is not in the best interest of Emulex stockholders.
Paul F. Folino, Executive Chairman of the Board of Emulex, said: "After a thorough review of the proposal in consultation with our advisors, the Board unanimously concluded that it is an opportunistic attempt by Broadcom to capture substantial current and long-term value that properly belongs to Emulex stockholders. The Board is very enthusiastic about Emulex's future prospects and the long-term value we expect to deliver through the Company's current strategy."
Jim McCluney, President and Chief Executive Officer of Emulex, added: "In addition to our leadership position in the host server and embedded storage markets, Emulex is also quickly becoming the premier provider of converged networking for the enterprise. As Broadcom is uniquely aware, Emulex has recently won tier-one original equipment manufacturer (OEM) contracts at the expense of Broadcom and our other competitors, and as such, we are well positioned to gain share in this rapidly growing segment. We look forward to continuing to execute on our strategy to create significant value for stockholders and customers over the long-term."
In a letter to Broadcom, the Emulex Board of Directors stated that Broadcom's unsolicited proposal is not in the best interests of Emulex stockholders because it:
* Significantly undervalues Emulex's long-term prospects, particularly with respect to our opportunities in network convergence, which are more than doubling Emulex's addressable market;
* Is opportunistic given Broadcom is aware of significant new unannounced design wins that Emulex has secured with tier-one OEMs, at the expense of Broadcom and other competitors, and their potential long-term value creation for Emulex and its stockholders;
* Is clearly timed to take advantage of Emulex's depressed stock price during the current unprecedented macroeconomic conditions. Emulex's stock price has traded well above the proposal price within the last 12 months.
Paul F. Folino, Executive Chairman of the Board of Emulex, said: "After a thorough review of the proposal in consultation with our advisors, the Board unanimously concluded that it is an opportunistic attempt by Broadcom to capture substantial current and long-term value that properly belongs to Emulex stockholders. The Board is very enthusiastic about Emulex's future prospects and the long-term value we expect to deliver through the Company's current strategy."
Jim McCluney, President and Chief Executive Officer of Emulex, added: "In addition to our leadership position in the host server and embedded storage markets, Emulex is also quickly becoming the premier provider of converged networking for the enterprise. As Broadcom is uniquely aware, Emulex has recently won tier-one original equipment manufacturer (OEM) contracts at the expense of Broadcom and our other competitors, and as such, we are well positioned to gain share in this rapidly growing segment. We look forward to continuing to execute on our strategy to create significant value for stockholders and customers over the long-term."
In a letter to Broadcom, the Emulex Board of Directors stated that Broadcom's unsolicited proposal is not in the best interests of Emulex stockholders because it:
* Significantly undervalues Emulex's long-term prospects, particularly with respect to our opportunities in network convergence, which are more than doubling Emulex's addressable market;
* Is opportunistic given Broadcom is aware of significant new unannounced design wins that Emulex has secured with tier-one OEMs, at the expense of Broadcom and other competitors, and their potential long-term value creation for Emulex and its stockholders;
* Is clearly timed to take advantage of Emulex's depressed stock price during the current unprecedented macroeconomic conditions. Emulex's stock price has traded well above the proposal price within the last 12 months.
Wednesday, April 22, 2009
Broadcom proposes to acquire Emulex for $9.25 per share in cash
IRVINE, USA: 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, 2009, 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 leadership in Ethernet networking, together with Emulex's deep expertise in Fibre Channel storage networking, will enable the combined company to accelerate the development of converged solutions for enterprise networks.
This combination offers compelling benefits to shareholders, customers and employees of both companies:
* Accelerates vision of network conversion which promises significant benefits to customers and the industry.
* Creates significant shareholder value for both companies.
* Emulex shareholders will receive a substantial premium to the current value of their shares and immediate value, in cash, for their equity stake in Emulex.
* Broadcom expects the acquisition of Emulex will be accretive to earnings per share in 2010.
* Broadcom 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.
Scott A. McGregor, President and Chief Executive Officer of Broadcom, said: "This combination is strategically compelling and provides significant value to the shareholders of both companies. Broadcom has long and successful experience, through over 40 transactions, of integrating companies into Broadcom, so this is a highly achievable proposal to deliver value to customers and employees 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," he added. "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."
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.
The offer represents a 40 percent premium above the closing price of Emulex common stock on April 20, 2009, 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 leadership in Ethernet networking, together with Emulex's deep expertise in Fibre Channel storage networking, will enable the combined company to accelerate the development of converged solutions for enterprise networks.
This combination offers compelling benefits to shareholders, customers and employees of both companies:
* Accelerates vision of network conversion which promises significant benefits to customers and the industry.
* Creates significant shareholder value for both companies.
* Emulex shareholders will receive a substantial premium to the current value of their shares and immediate value, in cash, for their equity stake in Emulex.
* Broadcom expects the acquisition of Emulex will be accretive to earnings per share in 2010.
* Broadcom 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.
Scott A. McGregor, President and Chief Executive Officer of Broadcom, said: "This combination is strategically compelling and provides significant value to the shareholders of both companies. Broadcom has long and successful experience, through over 40 transactions, of integrating companies into Broadcom, so this is a highly achievable proposal to deliver value to customers and employees 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," he added. "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."
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.
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