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July 10, 2009

Emulex rejects Broadcom’s bid

To keep avenues open for a bona fide offer from other party

By CBR Staff Writer

Broadcom’s bid to takeover Emulex came to an end when Emulex’s board of directors unanimously rejected the revised offer made by Broadcom to acquire the company for $11.00 per share in cash.

After a thorough review of the revised offer, the board determined that the offer undervalued Emulex’s long-term prospects, is inadequate, and is not in the best interests of Emulex and its stockholders.

Paul Folino, executive chairman of Emulex, said: “Throughout our review of Broadcom’s offers, the board has been focused first and foremost on serving the best interests of Emulex stockholders. 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.

Emulex originally filed a lawsuit in Orange County Superior Court in California, intensifying its battle against a $764m takeover bid from Broadcom, alleging that Broadcom can not be trusted as it has not fully disclosed details of the drug-related charges involving its former chief executive Henry Nicholas III.

The lawsuit said that It is material for stockholders and employees of Emulex to understand that they are not dealing with an honest enterprise. The suit asked for an injunction against Broadcom to prevent fraud and irreparable injury that would result from being taken over by a company, that reportedly, hasn’t disclosed everything about its troubled past.

However, Broadcom’s spokesman denied the charges and informed in a statement that none of the historical claims in this suit is relevant to the company’s $9.25 all-cash bid for Emulex.

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Broadcom’s announcement came after Emulex’s board rejecting the offer. 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 that it will allow its previously announced tender offer for Emulex stock to expire on July 14, 2009.
 

 

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