Broadcom Raises All-Cash Tender Offer for Emulex to $11.00 Per Share
Posted on: Monday, 29 June 2009, 18:18 CDT
Urging Support for Negotiated Transaction, Drops Consent Solicitation, Litigation
Broadcom Does Not Intend to Nominate Alternative Board Candidates
Represents Broadcom's Best Offer for Expedited Transaction; Offer Expires
This is the best offer Broadcom intends to make, reflecting Broadcom's assessment of the publicly available information on Emulex and the value Broadcom anticipates to itself from an expedited transaction. The offer represents a premium of 66% to Emulex's closing stock price on
The Board of Directors of Emulex Corporation
c/o
Executive Chairman of the Board of Directors
Emulex Corporation
3333 Susan Street
Dear Paul:
I am writing on behalf of the Board of Directors of Broadcom Corporation. As we have said since our first indication of interest last December, we believe combining our two companies will create significant value for our respective shareholders, employees, customers and partners. We believe the best way to realize this value is to act now to capitalize on the opportunities our two companies could create together. Delay - and its associated business risks and financial costs - erode the value of a combination. This is especially so because Broadcom has other value-creating opportunities. We believe it is in the interest of each company's stakeholders to complete a transaction expeditiously or to conclude that we cannot, and move on.
In the interest of bringing this matter to a rapid conclusion through a negotiated transaction, Broadcom is increasing its offer from
- 66% to Emulex's closing stock price on
April 20, 2009 , the day before we announced our initial offer; - 93% to the average closing price for the 30 trading days before our initial offer;
- Approximately 149% to Enterprise Value on the day before our initial offer;
- 69% to the analysts' median 12-month price target for Emulex on the day before our initial offer.
We recognize that, in the absence of our offer, Emulex's share price would have continued to fluctuate in the two months since our initial offer. Had the Emulex stock traded in line with the stock of its closest peer, QLogic Corp. (up 7.6% since
In view of the defenses that Emulex erected in response to our approach in
Since last December, we have sought to engage Emulex constructively and professionally. We hope this new approach will lead to a mutually beneficial dialogue and, ultimately, to a friendly transaction. The arguments in favor of this combination are substantial. Together, the talented employees of our two companies could accelerate the convergence of Ethernet and Fibre Channel. Broadcom's technology, scale, track record of execution, and highly successful history of acquisitions, along with Emulex's considerable strengths today would make a terrific combination for our combined employees and our customers.
In contrast, 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.
Paul, if we move quickly to combine our two companies with the speed required by market dynamics, great value can be delivered now to your shareholders and future opportunities created for ours. If not, we believe it is only prudent for Broadcom to consider other alternatives.
As required by law, we will extend our tender offer for an additional ten business days, until midnight
Based on our assessment of the information we have and that is publicly available about Emulex, this proposal represents the best offer we can make based on an expedited transaction. We hope it is a proposal the Emulex Board will support and we look forward to your response.
Sincerely,
President and Chief
Executive Officer
cc:
Note
Note 1 - Enterprise Value = Market Equity Value + Debt - Cash and Cash Equivalents.
About Broadcom
Broadcom Corporation is a major technology innovator and global leader in semiconductors for wired and wireless communications. Broadcom (R) products enable the delivery of voice, video, data and multimedia to and throughout the home, the office and the mobile environment. We provide the industry's broadest portfolio of state-of-the-art system-on-a-chip and software solutions to manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices. These solutions support our core mission: Connecting everything(R) .
Broadcom is one of the world's largest fabless semiconductor companies, with 2008 revenue of
This press release does not constitute an offer to buy or a solicitation of an offer to sell any securities. Broadcom has filed a Tender Offer Statement on Schedule TO with the U.S. Securities and Exchange Commission ("SEC") containing an offer to purchase all of the outstanding shares of common stock of Emulex Corporation ("Emulex") for
All statements included or incorporated by reference in this press release other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our business and industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words.
These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. Important risk factors that could contribute to such differences or otherwise affect our business, results of operations and financial condition include the possibility that Broadcom will not pursue a transaction with Emulex and the risk factors discussed in our Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings. The forward-looking statements in this release speak only as of this date. We undertake no obligation to revise or update publicly any forward-looking statement, except as required by law.
Broadcom (R), the pulse logo, Connecting everything (R), and the Connecting everything logo are among the trademarks of Broadcom and/or its affiliates in
SOURCE Broadcom Corporation; BRCM Corporate
Source: PR Newswire
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