UPDATE: Broadcom Offers $764 Million To Holders To Buy Emulex

Having been rebuffed by Emulex Corp.'s (ELX) board, Broadcom Corp. (BRCM) on Tuesday took its $764 million cash offer to buy the company directly to shareholders.

The offer - made through Broadcom's Fiji Acquisition Corp. unit - is the same $9.25-a-share bid that Emulex's directors rejected on Monday, claiming it was a lowball offer.

A spokesman for Costa Mesa, Calif.-based Emulex wasn't immediately available for comment.

"The Emulex board's response on Monday and its continued unwillingness to engage in discussions with Broadcom are clearly not in the best interests of either its stockholders or its customers," Broadcom Chief Executive Scott McGregor said in a statement.

Emulex shares slipped 2 cents to $10.73, while Broadcom shares fell 15 cents to $23.79.

The bad blood between the two is clear. Emulex called Broadcom's offer "opportunistic" and "timed to take advantage of a depressed stock price," knowing that it had valuable intellectual property.

McGregor shot back on Tuesday, noting that Emulex has failed to convert valuable design wins into meaningful revenue.

The soap opera will likely continue for a while.

"It's probably going to get uglier before it gets prettier over the short term," said Adam Benjamin, an analyst for Jefferies & Co.

Emulex's stock movement supports what many analysts have suggested: that a higher offer is needed. But whether Broadcom will raise its offer is another issue. Some had expected the two parties to talk further, but Broadcom decided to take a more direct approach.

Confident there are no other suitors, it's unlikely Broadcom will bid against itself, Benjamin said.

Broadcom, based in Irvine, Calif., is flush with cash after settling a long-standing feud with Qualcomm Inc. (QCOM). As part of their deal, Qualcomm has to pay Broadcom $891 million over four years.

By scooping up Emulex, which makes networking technology and software that connect servers and data centers, Broadcom, can sell Emulex's products through its sales channel. Broadcom primarily makes chips for devices such as television set-top boxes and cellphones.

The tender offer for the shares is scheduled to expire at midnight EDT on June 3, Broadcom said.

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; [e-mail]