UPDATE: Broadcom Launches Hostile Bid For Emulex

By Benjamin Pimentel

SAN FRANCISCO (Dow Jones) - Broadcom Corp. on Tuesday unleashed a hostile bid for Emulex Corp., a day after the networking company blasted the chip maker's unsolicited merger proposal as "opportunistic."

Broadcom (BRCM) said its wholly-owned subsidiary Fiji Acquisition Corp. has begun a tender offer for all outstanding shares of common stock of Emulex (ELX) for $9.25 a share for a total value of $764 million. The offer expires at midnight Eastern time on Wednesday, June 3.

Broadcom shares fell 0.7% to $23.77 Tuesday morning, while Emulex stock rose 0.2% to $10.77.

The Irvine-Calif.-based communications chip maker also it would file a preliminary consent solicitation that would amend Emulex's bylaws so that stockholders could call a special meeting to mull over the bid.

The moves comes a day after Emulex, which is based in Costa Mesa, Calif. rejected Broadcom's merger bid, saying it "significantly undervalues" the company's long-term prospects and was aimed at taking advantage of "Emulex's depressed stock price due to unprecedented macroeconomic conditions."

In a prepared statement, Broadcom CEO Scott McGregor fired back, arguing that Emulex board's "continued unwillingness to engage in discussions with Broadcom [is] clearly not in the best interests of either its stockholders or its customers. This intransigence could cause needless delay in efforts to combine our two companies, leading to further deterioration of Emulex's market share and stockholder value."

McGregor also charged that the Emulex board "has taken steps, including the adoption of a 'poison pill' and the imposition of bylaw amendments, to erect barriers to stockholders' ability to express their will as owners of Emulex."

"While we much prefer to arrive at a negotiated agreement with Emulex, the Emulex Board has left us with no choice but to ask Emulex stockholders to call for a special meeting of stockholders so that they can consider the merits of our offer for themselves," he said.