Chipmaker Broadcom Corp (BRCM.O) has made an unsolicited bid to buy Emulex Corp (ELX.N) for $764 million, and is suing the storage-equipment maker for adopting a "poison pill" to prevent a hostile takeover.
Broadcom said on Tuesday it sought talks with Emulex and its board in late December but was rebuffed by Emulex who said in early January that it was "not for sale and abruptly cut off the possibility of further discussions."
A representative for Emulex, which makes components used to connect computers to remote storage equipment, was not immediately available for comment.
Broadcom, a maker of chips for everything from cell phones to television set-top boxes, said it was willing to pay $9.25 per share in cash for Emulex, equivalent to a 40 percent premium over the company's Monday closing price.
Shares of Emulex jumped 41 percent to $9.30 in premarket trading, while Broadcom shares fell 8 percent to $20.05 after the chipmaker separately posted a quarterly loss.
Broadcom said Emulex adopted a "poison pill" amendment a week after it rejected Broadcom's overtures.
As a result, Broadcom said it was "commencing an action in the Delaware Court of Chancery against Emulex and its Board" to nullify a portion of its amended bylaws that says they may not be altered or repealed by shareholders without votes representing more than 66 percent of outstanding shares.
Broadcom said it had completed "extensive analysis and due diligence" on Emulex based on public information, and that it would expect a deal to add to its earnings per share in 2010.
Broadcom posted a first-quarter loss of $91.9 million, or 19 cents per share, compared with a profit of $74.3 million, or 14 cents per share in the same quarter the year before.
Excluding stock options and other items, Broadcom's earnings per share would have been 7 cents, higher than the average analyst estimate of 3 cents, according to Reuters estimates.
Revenue fell 17 percent to $853.4 million in the first quarter, topping the average Wall Street forecast of $848.25 million.
Broadcom expects second quarter revenue in a range of $900 million to $975 million, above the average analyst estimate of $865 million, according to Reuters Estimates.
Broadcom retained Banc of America as its financial advisor for the Emulex offer and Skadden, Arps, Slate, Meagher & Flom is its legal advisor.
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