Broadcom drops bid for Emulex

Scott McGregor blinked.

The CEO of Broadcom, the comm chip maker, was triply rebuffed by the management and board of Emulex on a proposed combination of the two companies, and so he gave up the chase this week.

Broadcom really, really tried to make this hostile takeover bid work. At the end of last month, the company bumped up its cash tender offer, to $11 a share for Emulex’s common stock, or about $912 million. It made the conciliatory gesture of dropping the lawsuit it filed against Emulex, challenging the “poison pill” takeover defense Emulex adopted early this year (after getting a private approach from Broadcom), and it pulled the consent solicitation it was making to amend Emulex’s bylaws and to call a special shareholder meeting.

It was to no avail. After consulting with its financial advisor, Goldman Sachs, and its legal counsel, Gibson, Dunn & Crutcher, the Emulex board this week still said: No dice. And the directors of Emulex were unanimous on that score.

For all the gory details, here’s the Broadcom statement and the Emulex statement.

Having absorbed the news that Broadcom was dropping its bid (and predictably driving down Emulex’s stock price), equities traders started boosting the stock price of QLogic, an Emulex competitor in the Fibre Channel-based data storage networks market, speculating that Broadcom would use its cash to bid for that company. Stay tuned!