April 21, 2009 -- Although overshadowed by the Oracle-Sun acquisition, things got hot in The OC today with Broadcom’s $764 million bid for fellow Orange County, CA resident Emulex.
Actually, this isn’t new. Broadcom approached Emulex in late December with an acquisition offer. Emulex told them to take a hike and subsequently, in January, concocted a poison pill and amended its bylaws (which subsequently led to Broadcom filing a lawsuit) to thwart Broadcom’s overture. What’s new is that Broadcom is taking its case public, or least to Emulex shareholders.
I have no idea if Broadcom will be successful in this bid. I suppose it depends on how Emulex execs and shareholders see the company’s future in the context of competition with QLogic and Brocade on the HBA and FCoE CNA battlefields. Is QLogic ahead of Emulex on the FCoE front? Can Brocade upset the Emulex-QLogic duopoly on the HBA front? If the answer to either of those questions is ‘yes,’ then now may be the time for a sale. And the price -- $9.25 per share -- seems to be sweet: about a 40% premium over yesterday’s share price of Emulex stock.
Obviously, Broadcom wants Emulex primarily for its Fibre Channel expertise and technology; more specifically, perhaps, its FCoE technology as Broadcom moves into the so-called converged networking space (Ethernet + Fibre Channel). As such, Broadcom is probably also eyeing QLogic. And it’s possible that the deal could turn as rapidly as the IBM-Sun to Oracle-Sun deal.
It’s also possible that Emulex could find a white knight or, more likely, push the acquisition price closer to the $1 billion mark.
If the Broadcom-Emulex deal does go through (financial analyst speculation is running about 50-50), it would have repercussions and a ripple effect across the storage industry, and would lead to more acquisition speculation. QLogic would be in play (with Brocade as a possible suitor, or maybe Cisco). Maybe even Brocade would be in play.
Given the Oracle-Sun acquisition, anything can happen.
Related articles:QLogic delivers single-chip CNAsEmulex CNAs support 10GbE, iSCSI, FCoEBrocade launches FCoE switch, adapters
posted by: Dave Simpson