Data centers

01:30 AM
Connect Directly

Emulex Jilts SAN Valley

At the eleventh hour, Emulex backs out of buying SAN Valley. What happened?

Less than two weeks ago, executives at SAN Valley Systems Inc., a maker of Fibre Channel over IP gateways, were breathing sighs of relief as Emulex Corp. (NYSE: ELX) signed a letter of intent to acquire the company.

But regrettably for the struggling startup, the deal was scuttled at the last minute when Emulex got a nasty case of the jitters. The expression the deal isn't done until it's done -- or as Wall Street likes to say, another "DFT" (deal fell through) -- is pretty well-worn these days, given the unstable market conditions.

In Emulex's case, its stock was at around $25 a share two weeks ago, but it's down to $19 today. "Market psychology matters," says a financial analyst familiar with both companies, who requested anonymity. "In better times, Wall Street would see this acquisition as an expansion of Emulexs addressable market, on the cheap; but in a nervous market it’s seen as a sign of desperation."

The weekend before the deal was due to close, Emulex executives rang the SAN Valley crew and called the deal off. The financial details of the acquisition were unavailable. Officials at Emulex and SAN Valley declined to comment on the record.

An insider at SAN Valley told us this kind of thing happens all the time. "A letter of intent is non-binding," the source says. "There is more due diligence after this, then a definitive agreement, then closing."

1 of 3
Comment  | 
Print  | 
More Insights
Hot Topics
VMware NSX Banks On Security
Marcia Savage, Managing Editor, Network Computing,  8/28/2014
Real-World SDN, Lesson 2: Conquer The Enemy Within
Symon Perriman, Senior Technical Evangelist, Microsoft,  8/25/2014
How To Survive In Networking
Susan Fogarty, Editor in Chief,  8/28/2014
White Papers
Register for Network Computing Newsletters
Current Issue
2014 Private Cloud Survey
2014 Private Cloud Survey
Respondents are on a roll: 53% brought their private clouds from concept to production in less than one year, and 60% ­extend their clouds across multiple datacenters. But expertise is scarce, with 51% saying acquiring skilled employees is a roadblock.
Twitter Feed