Emulex to Broadcom: You Call That Thing an Offer?

Emulex dissed and dismissed an unsolicited bid from Broadcom this morning saying it “significantly undervalues Emulex” and is not in the best interests of shareholders. In a blistering letter appended to the rejection announcement, Emulex (ELX) CEO Paul Folino described Broadcom’s (BRCM) unsolicited $9.25-a-share cash takeover offer as “an opportunistic attempt to take advantage of Emulex’s depressed stock price” in a souring economy. “Your proposal is approximately 37% below the Company’s 52-week high of $14.74 per share,” Folino writes. “Over this same time period, the Nasdaq is down approximately 33% and our industry as a whole is trading at significantly depressed values. Additionally, Emulex’s stock was trading near its lowest levels in nearly ten years just before your proposal.”

Continuing, Folino accuses Broadcom of engineering its bid to commandeer new contracts that Emulex recently won at the expense of its rivals–including Broadcom.

“Your unsolicited proposal is opportunistic given Broadcom is uniquely aware of the new unannounced design wins that Emulex has secured with tier-one OEMs at the expense of Broadcom and other competitors,” Folino writes. “As you know, these design wins are kept confidential at our customers’ request and do not typically begin contributing revenue for several quarters. Thus, Emulex’s stock price does not fully reflect the long-term value creation potential that the Company has already secured. However, given that some of these design wins have come at your expense, including your core Ethernet networking business, you are uniquely aware of the future value we have secured and how well positioned we are to unseat you on many other platforms in the near future. We believe your proposal is an opportunistic attempt to capture that value, which rightly belongs to our stockholders.”

In other words, quit low-balling us–especially if, as you profess, you’d like to move ahead with a deal in a “friendly, collaborative manner.”