Broadcom presses Emulex shareholders to meet about deal

Broadcom wants Emulex shareholders to voice their views on Broadcom's US$764 million unsolicited offer to buy Emulex after failing repeatedly to negotiate a deal between the two companies' boards.

Broadcom Tuesday filed papers with the U.S. Securities and Exchange Commission to make what is called a Consent Solicitation by Broadcom live, the company said. The filing makes it possible for Emulex shareholders to submit consent cards about Broadcom's offer that would decide whether to call a special meeting to voice their opinions on the matter.

Emulex on Tuesday responded to the filing by scheduling its next stockholder meeting for Nov. 19, rather than holding off until next year as Broadcom has suggested, according to a press statement by Emulex.

Broadcom took its unsolicited bid, which is $9.25 a share, directly to Emulex shareholders through a tender offer on May 15 after Emulex's board rejected it, saying it undervalued the company. Emulex has asked shareholders to reject the tender offer.

"Broadcom has erroneously suggested ... that their consent solicitation provides the only viable forum for stockholders to express their views," Emulex CEO Jim McCluney said in the statement. "With our annual meeting now scheduled, we believe it is clear that Broadcom’s consent solicitation is nothing more than an opportunistic attempt to gain leverage for themselves and further their grossly inadequate offer."

He added that Emulex's board continues to recommend against Broadcom's tender offer and consent solicitation.

Broadcom's SEC filing also revealed details of an e-mail exchange on Monday between McCluney and Broadcom CEO Scott McGregor that seems to show it's unlikely the two companies' boards will come to a consensual agreement on a deal.

According to the filing, McCluney, responding to a June 5 phone conversation with McGregor, declined to provide Broadcom with nonpublic information about Emulex -- "including highly competitive and sensitive information regarding our technology, details of customer plans, design wins and financial plans" -- that the company requested.

"We fail to see how it would be in the best interests of Emulex stockholders to share such information with Broadcom based on the facts you have made public to date, including an offer that has been unanimously deemed by the Emulex Board to be grossly inadequate," McCluney wrote, according to the filing.

In response, McGregor wrote that Broadcom is seeking the information in an effort to negotiate a transaction to which Emulex's board might be amenable, since Broadcom would prefer to make a deal that way rather than by taking over the company through a shareholder vote and replacement of Emulex's board.

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