Broadcom raised its hostile takeover bid for Emulex from $9.25 a share to $11 a share and told its target that it shouldn’t get too cocky about its future prospects. The message from Broadcom: Without a buyout Emulex is unlikely to see $11 a share for a while.
In addition, Broadcom gave Emulex a July 14 deadline to make its decision on the offer, which is now worth $912 million (statement). The deadline is much needed since this saga has dragged on. Emulex advised shareholders to take no action on the Broadcom bid.
Among the key points:
- Broadcom says that its offer is a 66 percent premium to Emulex’s April 20 price the day before its original offer.
- Broadcom says that Emulex shares would be about $7.11 without its offer.
- Broadcom won’t challenge Emulex’s poison pill provisions anymore.
And the “come to your senses already” quote from Broadcom CEO Scott McGregor:
It remains unclear to us that Emulex is likely to achieve value for its shareholders greater than our significantly enhanced cash offer within a reasonable period of time on a standalone basis. We hope you and your Board will balance your optimistic view of your prospects to be the dominant player in the CNA market by FY2012 with a realistic assessment of the risks associated with achieving your projections, the intense competition you will face in the market, and the headwinds you will encounter from a core market that is in long term decline.
