UPDATE: Emulex Rejects Broadcom's Bid As 'Opportunistic'

By Benjamin Pimentel

SAN FRANCISCO (Dow Jones) -- Emulex Corp. has rejected Broadcom Corp.'s unsolicited merger proposal, calling the acquisition bid "opportunistic," the company said Monday.

Shares of Emulex (ELX) traded up 3% in morning action.

The Costa Mesa, Calif.-based maker of networking equipment announced that its board had determined that Broadcom's bid to buy the company for $9.25 a share was unacceptable.

Broadcom shares were up 1.5%. Late last month, the maker of communications chips (BRCM) unveiled an unsolicited bid to buy Emulex for $764 million.

But in a letter to Broadcom CEO Scott McGregor and the company's board, Emulex said the proposal "significantly undervalues Emulex's long-term prospects."

"Your unsolicited proposal is an opportunistic attempt to take advantage of Emulex's depressed stock price due to unprecedented macroeconomic conditions," said Paul Folino, executive chairman, in the letter.

The company also argued that Broadcom's proposal is "approximately 37% below the company's 52-week high" -- $14.74 a share, a price set May 16, 2008.

"Over this same time period, the Nasdaq is down approximately 33% and our industry as a whole is trading at significantly depressed values," Folino added.

Emulex also criticized Broadcom's bid to make an issue out of changes in the company's corporate-governance policies. In its acquisition proposal, Broadcom had also warned the Emulex board that it has asked a Delaware court to invalidate recent changes in the company's bylaws meant to hamper the sale of the company.

In the letter, Folino countered: "It is unclear why you raised these subjects and made inaccurate statements in regard to them as they are unrelated to your proposal, so I will not respond other than to strongly urge you that any statements you plan to release to the public or make to stockholders or customers in the future be accurate."

Irvine, Calif.-based Broadcom could not immediately be reached for comment.