AlphaNinja - Well they got what they wanted. "They" being Emulex's board of directors and management, who've fought a PR battle against Broadcom's (BRCM) attempt to acquire the company -->> even going so far as to adopt a "shareholder rights" provision (also called "poison pill," as it's often a way for management to protect their jobs).
I've previously detailed each side's arguments in this struggle. Emulex (ELX) complains that Broadcom is desperate for exposure to their space, and they're right -->> "buy vs. build" is by no means a new concept.
Today Broadcom ended its pursuit for good after Emulex's board issued the following rejection of its $11 offer:
And Broadcom promptly responded that they are done with this mess...
IRVINE, Calif., July 9 /PRNewswire-FirstCall/ -- Broadcom Corporation (Nasdaq: BRCM - News), in response to today's rejection by the Board of Directors of Emulex Corporation (NYSE: ELX - News) of its proposal to enter into friendly discussions toward a negotiated transaction, said it would cease all efforts to acquire Emulex.
Broadcom reiterated that its all-cash $11-per-share offer, announced on June 29, 2009, is the best offer it intends to make. Broadcom said it will allow its previously announced tender offer for Emulex stock to expire at midnight Eastern Time on July 14, 2009.
"As we stated in our letter of June 29, 2009 to the Emulex Board, we believe it is in the interest of each company's stakeholders to complete a transaction expeditiously or to move on," said Scott A. McGregor, President and Chief Executive Officer of Broadcom. "Although we were unable to negotiate an expeditious and friendly transaction at a price that makes sense to us given the expectations set by the Emulex Board, there are other value-creating alternatives that we will now turn our attention to as we position Broadcom to capitalize on the emerging opportunities in the converged enterprise networking markets."
Because of Emulex's rejection, coupled with its previous adoption of a poison pill and other revisions made to its corporate bylaws in January 2009, Broadcom does not expect that the conditions to close its tender offer will be satisfied by July 14, 2009, and Broadcom does not intend to waive any of these conditions. Assuming that the conditions are not satisfied on or before July 14, 2009, Broadcom will not accept for payment any shares that have been tendered and will return those shares as promptly as practicable after the tender offer expires.
So here we are with Emulex shares back to 8.36, 24% below the buyout price that the board rejected on behalf of its shareholders. Maybe they're correct about their bright long-term prospects, but for now the market is unimpressed. It'll be interesting to see if the company proves the naysayers wrong.
3-month ELX chart: