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Emulex eats 87% of Endace for Ethernet examinations

Elliott says no thanks

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Emulex has acquired ownership of 89 per cent of New Zealand-based Ethernet network traffic analysis company Endace. One of the 11 per cent holdouts is an Elliott Management subsidiary which also holds Emulex shares. It wants Emulex to stop spending on acquisitions and slip a few greenbacks into shareholders' wallets.

Endace CEO Mark Riley becomes an Emulex SVP and general manager of the Endace division of Emulex. Jim McCluney, Emulex's CEO, reckons the acquisition will double Emulex's total addressable market. While the bid to buy Endace has been ongoing, two activist shareholders in Emulex - Elliott Management and Altai Capital - have been agitating for a change in direction by Emulex, driven by a new board. They're hoping for an evaluation of strategic options including selling the company as a way of returning cash to shareholders or raising share value.

Now it turns out that an Elliott subsidiary, Elliott International LP, together with partner Liverpool Limited Partnership, owns 1,543,500 Endace shares - which is 10.14 per cent of the 15,220,068 shares of Endace outstanding. It has refused the Emulex acquisition offer so far, and has until 13.00 London time on 12 March, 2013 to submit its shares to Emulex's offer of 500 pence/share.

It reported its holding on 27 December, 2012, back when Endace shares were trading at 475p. If it accepts the Emulex offer it can book a likely £385,875 profit, less dealing costs. Endace is likely to be delisted from the London Stock Exchange soon. ®

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