Broadcom Offers to Acquire Emulex for $764 Million in Cash

Broadcom has announced an unsolicited offer to the board of Ethernet networking vendor, Emulex Corp to buy the company for approximately $764 million. The offer represents a 40 percent premium above the closing price of Emulex common stock on April 20, 2009, a 62 percent premium to trailing 30 day average price per share and an approximately 85 percent premium to enterprise value.

Broadcom expects that the acquisition of Emulex will be accretive to earnings per share in 2010. Broadcom's cash offer will be funded from its approximately $2 billion of existing cash and marketable securities on hand, with the fundamentals of Broadcom's capital position remaining strong.

Scott A. McGregor, President and Chief Executive Officer of Broadcom, said, "This combination is strategically compelling and provides significant value to the shareholders of both companies. Broadcom has long and successful experience, through over 40 transactions, of integrating companies into Broadcom, so this is a highly achievable proposal to deliver value to customers and employees of both companies.

"A combination of Broadcom and Emulex addresses our customers' growing need to apply the economics of Ethernet to the Fibre Channel storage space to achieve low-cost network converged solutions," Mr. McGregor added. "The logical evolution of the enterprise network is for a transition to a converged fabric architecture that incorporates a broad array of technologies. Our combined entity can be a one-stop shop for key networking and storage technologies for the enterprise and for our industry. Our preference is to proceed in a friendly, collaborative manner, and we hope that Emulex's Board will see the merits of this combination and appreciate the substantial value being offered to its shareholders."

The company also said that it belives the combination of Broadcom and Emulex to be highly complementary, with little customer or product overlap and compatible workforces.

Broadcom expects the operational integration of Broadcom and Emulex to be highly achievable, given the complementary nature of the companies' businesses. Both companies are headquartered in Orange County, CA.

Today, Mr. McGregor sent a letter to Emulex's Board of Directors outlining the proposal, with the goal of moving rapidly to the negotiation and closing of a transaction.

Posted to the site on 21st April 2009