Broadcom launches $764-million hostile bid for Emulex

22 April 2009

After big pharma, it now seems to be the technology sector that is looking at acquisitions during the current economic slump where valuations of targets have turned attractive for potentila acquirers.

Broadcom, the supplier of integrated circuits for broadband communications is once again trying to acquire Emulex with an unsolicited offer of $764 million in cash, announced today, after having been rejected in December 2008.

Emulex has advised its ahreholders agains the offer, sayuing, "The board will review the proposal in due course, consistent with its fiduciary duties, in consultation with its financial advisor, Goldman, Sachs & Co, and its legal advisor, Gibson, Dunn & Crutcher LLP. Emulex noted that there is no need for Emulex stockholders to take any action at this time."

This technology sector deal comes close after Oracle acquired Sun Microsystems on mutually agreeable terms this week for $7.4 billion (See: Oracle trumps IBM, acquires Sun Microsystems for $7.4 billion).

The first time when Irvine, California-based Broadcom approached Emulex in December, the chip maker was sent packing by the board of Emulex saying that the company was not for sale. Emulex also immediately amended the company's byelaws introducing poison-pill defences that made it frightfully expensive for any hostile takeover.

Broadcom has now offered $9.25 per share in cash, which is 40 per cent higher than Emulex's closing price on 20 April.

Since Emulex's technology for transporting information from data centres to storage systems is fast, reliable and difficult to emulate, an area that Broadcom has been trying to enter for years in vain, it becomes an attractive acquisition target.