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Broadcom Attempts to Buy Emulex for $764M

Broadcom Corp. (Nasdaq: BRCM) announced Tuesday that it has made an unsolicited $764 million bid to acquire
Emulex Corp. (NYSE: ELX). The move is an effort to bring Broadcom's Ethernet offerings and Emulex's Fibre Channel storage networking products to enterprise networks in a one-stop fashion.

While the offering in a letter from Broadcom president and CEO Scott McGregor to Emulex's board chairman was couched in friendly terms, McGregor indicated that the offer would be presented directly to Emulex stockholders, if necessary.

"A combination of Broadcom and Emulex addresses our customers' growing need to apply the economics of Ethernet to the Fibre Channel storage space to achieve low-cost network converged solutions," said McGregor in a statement. "The logical evolution of the enterprise network is for a transition to a converged fabric architecture that incorporates a broad array of technologies. Our combined entity can be a one-stop shop for key networking and storage technologies for the enterprise and for our industry."

McGregor noted that the offer is a 40% premium over Emulex's closing stock price on Monday. He expects an Emulex acquisition would be accretive to Broadcom's earnings in 2010. The Broadcom chief also observed that Broadcom has a long experience of successfully integrating some 40 acquisitions.

McGregor went on to argue that there is little customer overlap between the products of both companies and that the engineering departments of both firms would complement each other. He also praised Emulex's expertise in storage, host bus adapters, and diversified channels as representing advantages to the combined offerings of both companies. Both are located in Orange County, California.

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