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Broadcom ready to raise Emulex bid

Can't we at least just sit down and talk?

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Broadcom could be about to raise its $9.25/share bid for Emulex and so get the FCoE firm to at least sit down and talk, if sources are to be believed.

Ethernet switch and chip supplier Broadcom is trying to buy Emulex in the face of determined Emulex board-level objections. Emulex has Fibre Channel over Ethernet (FCoE) technology and a line of Converged Network Adapters (CNAs) which merge an Ethernet Network Interface Adapter (NIC) and Fibre Channel Host Bus Adapter (HBA).

The Fibre Channel technology stack inside the CNA can be used by Broadcom by adding it to its Ethernet chips which it supplies to NIC, and target Ethernet devices such as those used by storage array vendors who look to be adding native FCoE interfaces to their arrays.

Emulex competitor QLogic, which also has a CNA line, reckons all major server and storage array vensdors will have announced FCoE interfaces by the end of the year. Against this background any Ethernet chip supplier which does not have FCoE capability will be at a disadvantage as data centre users converge their server network edge networking onto Ethernet, which seems a given, and begin implementing direct FCoE interfaces to storage arrays, which seems a possibility.

Two financial analysts, not ready to go public plus Stifel Nikolaus' Aaron Rakers, reckon Broadcom is now actually ready to raise its bid, with Rakers suggesting a $10.50 - $11/share offer, amounting to $880m or so. Emulex's shares are currently trading at $10.90.

Many of the Emulex objections to the current Broadcom bid assert, and assert vigorously, that it under-values Emulex. Broadcom has previously tried to get inside information from Emulex to see if a raised bid is justified but been rebuffed; Emulex seemingly wanting it to pony up more cash before agreeing to any substantive talks.

Rakers thinks a raised bid could come in the next week or so. If it's successful then FCoE could stand for Finance Counters Objections at Emulex. ®

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