Broadcom Stops Pursuing Emulex

Broadcom Corp. (BRCM - Analyst Report) yesterday dropped all efforts to acquire Emulex Corp. (ELX - Snapshot Report) after the latter rejected its revised acquisition offer. Broadcom had earlier raised its hostile bid to acquire all outstanding shares of rival Emulex from $9.25 per share to $11.00 per share.

Broadcom has been involved in a fierce battle to acquire Emulex since May. The company had earlier said that the $912 million revised offer was the best it could offer Emulex.

On the other hand, Emulex stated that the offer significantly undervalued its long-term prospects and was not in the best interests of its shareholders. The company appealed to the investors to not tender their shares into the offer.

Emulex has already turned down the bid twice arguing that the offer is grossly inadequate and fails to include the potential value of unannounced products and their prospective contribution to revenue. Emulex feels that Broadcom intends to take advantage of its deflated stock price amid recessionary conditions.

Broadcom had earlier asked Emulex for more details on confidential information about its unannounced design contracts and signaled that it might be willing to raise its offer. However, Emulex’s management denied the request for access to confidential information stating that Broadcom was asking for "highly competitive and sensitive information" like details about Emulex’s technology, its financial and customer plans. We maintain a Hold on Broadcom.