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Broadcom drops takeover bid for Emulex

Fri, 07/10/2009 - 8:10am
The Associated Press

COSTA MESA, Calif. (AP) – Broadcom Corp. is dropping its attempted takeover of Emulex Corp. following a unanimous vote by the network gear-maker's board to reject Broadcom's sweetened offer.

Emulex said Thursday that Broadcom's bid – $11 per share, or $912 million – still lowballs the company's long-term value.

The companies each make equipment for corporate data networks.

Last month, Broadcom raised its offer from $9.25 per share after Emulex argued the original bid discounted unannounced design contracts that will put the company in a better competitive position.

Citing a raft of new contracts with manufacturers Thursday, Emulex said the latest offer still undervalues the company.

The failed takeover sent Emulex shares down $1.30, or 13.4 percent, to $8.40, in late morning trading while Broadcom's stock rose 76 cents, or 3.3 percent, to $24.11.

Broadcom first approached Emulex about a takeover in December. The company said an acquisition would help with development of new, lower-cost equipment for corporate data centers.

Emulex cut off talks in early January and followed up by writing a "poison pill," a provision meant to block takeovers, into its bylaws.

Broadcom, based in Irvine, Calif., pushed for a special meeting of shareholders to discuss its offer and propose a new slate of directors for Emulex but was rebuffed and its original bid attracted few takers.

On Thursday, meanwhile, Costa Mesa-based Emulex released preliminary fiscal fourth quarter results at the high end of its previous forecast. The company expects adjusted earnings near the top of a range between a penny and 5 cents per share on sales of $78 million to $79 million. Analysts expect 4 cents per share and $77.3 million, according to Thomson Reuters.

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