UPDATE: Proxy Firm: Emulex Holders Should Shun Broadcom Plan

Emulex Corp. (ELX), facing a $9.25-a-share hostile takeover offer from Broadcom Corp. (BRCM), received the backing of proxy adviser Glass Lewis & Co. Monday when the firm recommended stockholders reject Broadcom's consent solicitation calling for an investor meeting to vote on a new slate of directors.

Glass Lewis recommended investors reject all five of Broadcom's proposals, as the reforms were submitted "merely in an effort to force an acquisition of the company."

The proxy adviser added that it "finds no reason to believe that Emulex's board has not acted in the best interests of shareholders."

For its part, Broadcom questioned Glass Lewis's interpretation of the proposals.

"Glass Lewis' recommendation against consent fundamentally misinterprets Broadcom's consent solicitation, which remains the best vehicle for Emulex shareholders to express their views," Broadcom said.

Broadcom added that Glass Lewis made an initial recommendation that shareholders support two of Broadcom's proposals. However, the earlier report was a draft that was published inadvertently, as opposed to the finalized version, said Glass Lewis's chief policy officer, Bob McCormick.

McCormick said the finalized report was provided to clients about two hours after the release of the draft recommendation.

Broadcom's attempted takeover of storage networking firm Emulex has become increasingly nasty, with both sides attacking each other's motives and initiating lawsuits.

However, Emulex shares have consistently traded above the $9.25 offer price, leading few stockholders to tender shares to Broadcom when a better price is available on the open market. As of June 17, less than 3% of Emulex shares were tendered.

"We appreciate the broad support we have received from stockholders on the Board's recommendation against Broadcom's offer," said Emulex Chief Executive Jim McCluney in a statement.

Emulex shares were recently down 3% to $10.72. Broadcom fell 2.8% to $24.78.

-By Jerry A. DiColo; Dow Jones Newswires; 212-416-2155; [e-mail]