Emulex Urges Shareholders To Reject Broadcom Offer

COSTA MESA, Calif. (AP) -- Network gear maker Emulex Corp. said Tuesday it sent a letter to its shareholders continuing to urge them not to tender their shares into an unsolicited $9.25 per share tender offer from chip maker Broadcom Corp.

Emulex has already recommended that its shareholders reject the offer, worth $764 million, and the company also rebuffed an earlier cash offer of the same amount.

Emulex said in its letter to shareholders that Broadcom's offer "significantly undervalues Emulex" and called it an "opportunistic attempt to capture significant value that rightly belongs to all of you."

In a filing with the Securities and Exchange Commission last week, Broadcom said that after "refusing to engage in constructive discussions," the Emulex board "has suddenly produced a set of new, rosy, 'hockey stick' projections which may or may not become reality sometime in 2012."

"We encourage Emulex shareholders to evaluate these forecasts in light of Emulex's disappointing history of missing forecasts and its recent failure to grow either revenue or market share," Broadcom said on May 19.

Emulex, however, called Broadcom's statements misleading and said it has met or exceeded the high end of its earnings guidance for 11 of the past 12 quarters despite the economic turmoil.

Emulex also said it has achieved 12 new design contracts with tier-one manufacturers in recent months, and expects these to "support the vast majority of our projected $150 million in converged networking revenues in fiscal year 2012, increasing Emulex's total revenue to $600 million in the same time period."

The company said the 12 design contracts were not public prior to the Broadcom proposal, and noted that such "new design wins typically begin generating revenue several quarters after they are secured."

A representative for Broadcom could not immediately be reached for comment.

Shares of Emulex rose 32 cents, or 3 percent, to $11.09 in midday trading. Broadcom's rose 20 cents to $22.45.

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