Broadcom is dangling the carrot of a potentially raised bid in front of Emulex, but says it needs access to inside information.
Reuters reports that Broadcom CEO Scott McGregor made the offer in an email to Emulex CEO Jim McCluney.
Broadcom, an Ethernet switch supplier, is trying to take over Fibre Channel server adapter vendor Emulex with a hostile bid which, Emulex claims, grossly undervalues Emulex and comes from an untrustworthy company. The Broadcom tender offer, which closes on June 17, is for $9.25 a share and totals $764m. It had gained less than three per cent of Emulex outstanding shares and so extended the tender closure date from June 3.
Emulex has Fibre Channel Host Bus Adapter (HBA) products and is developing Fibre Channel over Ethernet (FCoE) ones that help converge general data centre networking and stirage networking onto Ethernet. The FCoE technology is the magnet for Broadcom.
In reply to the McGregor mail, McCluney said no inside information relating to Emulex's technology, financial and customer plans would be given to Broadcom. He didn't see how it would be in the best interests of Emulex shareholders for such information to be divulged.
Broadcom is seeking consent from Emulex shareholders to enable the calling of a special meeting which could force Emulex's management to change company bylaws and remove obstacles to the Broadcom bid. It would like to get this consent by the July 4 weekend so that Emulex stockholders could call a meeting before the autumn.
Emulex has scheduled an annual meeting of stockholders for November 19, a move which Broadcom has characterised as a delaying tactic. It has previously hinted that it could walk away if its bid took too long to reach a conclusion.
It is beginning to look, with this far less than overwhelming acceptance of Broadcom's tender offer, as if Emulex is going to wriggle out from under Broadcom's attempt to gobble it up. ®