The board of Costa Mesa-based Emulex Corp. unanimously rejected Irvine-based Broadcom Corp.’s sweetened $11 per share offer for the company, putting an end to a takeover campaign that had become hostile.
Emulex said in a release today the bid “significantly undervalues Emulex’s long-term prospects, is inadequate, and is not in the best interests of Emulex and its stockholders.”
Broadcom responded by announcing it would abandon its takeover attempt. Last week it had increased the bid 19% from $9.25. Both companies sell chips that help server and storage computers transfer data.
Emulex shares closed at $8.94, down 8% from Wednesday. Its shares fell as low as $7.94 earlier in the day, the biggest intraday drop since July 2004. Broadcom rose 4% to close at $24.31.
Emulex also said it expects to report revenues of in the range of $78 million to $79 million for its fiscal fourth-quarter ended June 28, just shy of the high end of a previously announced range of $73 million to $80 million.
Bloomberg quotes Tristan Gerra, an analyst at Robert W. Baird & Co. in Milwaukee, saying, “Broadcom can be fine without it. They could develop products internally, or there are other companies that could be bought.”
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Why Broadcom asking too much for Emulex? Market demand and outlook are very bad.