It turns out Broadcom can take a hint after all.
After Emulex repeatedly spurned its acquisition offers, Broadcom today threw in the towel and said it will walk away. However, the Ethernet-chip maker may not be giving up on buying a storage company altogether.
“Although we were unable to negotiate an expeditious and friendly transaction at a price that makes sense to us given the expectations set by the Emulex board, there are other value-creating alternatives that we will now turn our attention to as we position Broadcom to capitalize on the emerging opportunities in the converged enterprise networking markets,” Broadcom CEO Scott McGregor said in a news release.
Broadcom’s decision to walk came after Emulex’s board today rejected its latest offer to buy the HBA company, claiming the bid of $11 per share or about $912 million is still too low.
“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,” Emulex chairman Paul Folino said in a statement.
Folino did add, “we would of course give full consideration to a bona fide offer from any party that reflects the full value of the company.”
Broadcom had been chasing Emulex since December, and made its first formal offer of $9.25 per share or $764 million in April. Emulex management has accused Broadcom of trying to take advantage of its depressed stock price during bad economic times. Emulex shares closed at $9.70 Wednesday, but opened at $8.44 today and traded at $8.90 by mid-afternoon after the deal fell through.
What are Broadcom’s alternatives? Emulex rival QLogic would be even more expensive to buy, so that’s probably not an option. Broadcom can try to build its own Fibre Channel over Ethernet (FCoE) products, or it could pursue LSI’s dormant FC HBA technology.
Emulex also said today it expects to report revenues of approximately $78 million to $79 million for last quarter, in the high end of its forecast of $73 million to $80 million. CEO Jim McCluney added that Emulex recently scored two OEM design wins for its LightPulse HBAs and two design wins for its 10 Gbps Ethernet OneConnect converged network adapters – all with tier 1 vendors. Emulex did not name its partners on those deals.