Chipmaker Broadcom Corp. (Nasdaq: BRCM) has emerged as the leading bidder for the assets of bankrupt Fibre Channel switch vendor Gadzoox Networks Inc. (OTC: ZOOX), according to the investment banker advising Gadzoox in its bankruptcy filing.
Broadcom submitted an asset purchase agreement for Gadzoox's assets with a bid of $8.5 million a week and a half ago, says Nels Nelsen, a partner with Alliant Partners.
Gadzoox, which saw its shares triple when it went public in July 1999, had a market capitalization of $2 billion in December of that year.
The next step in the process will be an auction for Gadzoox, to be held Feb. 14. Any other interested bidders must pay a $500,000 deposit by next Friday, Feb. 7, to be able to participate. "If no other bidder comes forth, the [bankruptcy] court will probably approve the sale to Broadcom," Nelsen says. He says other parties have expressed interest in picking up Gadzoox's assets, but he was not at liberty to name them.
In an unusual twist, Carl Berg, CEO of Cupertino, Calif.-based Mission West Properties, will acquire Gadzoox's legacy product line inventory, according to Nelsen. That means Broadcom would pay $8.5 million minus the value of certain inventory, cash, and receivables. "Net/net, it's projected that they'll pay slightly less than $5 million" for Gadzoox, Nelsen says.
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