Broadcom on Thursday ended its bid to acquire Emulex and, with it, dashed Broadcom's hopes of combining the two companies' technologies to bring storage and IP networking into a single, converged network.
Broadcom, which in April made an unsolicited all-cash bid to acquire Emulex for $9.25 per share, raised its offer to $11 per share on June 29, only to be rejected yet again on Thursday.
Broadcom of Irvine, Calif., develops semiconductors for wired and wireless communications and networking. Emulex, based in neighboring Costa Mesa, Calif., develops storage networking controller chips, adapters, blades and connectivity solutions, and counts as OEM customers such vendors as Dell, EMC, Fujitsu-Siemens, Hitachi Data Systems, Hitachi, Hewlett-Packard, IBM, LSI, NEC, NetApp and Sun Microsystems.
The acquisition, if it had gone through, would have enabled Broadcom to use both companies' technologies to accelerate the development of converged solutions for enterprise networks.
Data center convergence has become a major technology drive as customers look for better ways to improve the efficiency of their IT operations.
That convergence includes such things as Fibre Channel over Ethernet, a new version of the Ethernet protocol that allows Fibre Channel connectivity to happen on the same network as IP traffic and could eventually work with a variety of IP and storage protocols over a single network.
Convergence in the data center is also coming from moves by major IT vendors to combine server, storage and networking technologies, as evidenced by Cisco's recent entry into the server market with its Unified Computing System (UCS) and similar moves by more established server vendors like IBM, HP and Sun.
Scott A. McGregor, president and CEO of Broadcom, said in a statement that Broadcom still believes a combination of the two companies would have been in the best interests of both, but that it is time to move on.
"Although we were unable to negotiate an expeditious and friendly transaction at a price that makes sense to us given the expectations set by the Emulex Board, there are other value-creating alternatives that we will now turn our attention to as we position Broadcom to capitalize on the emerging opportunities in the converged enterprise networking markets," McGregor said.
Earlier on Thursday, Emulex said in a statement that, after studying the revised $11-per-share offer from Broadcom, its Board of Directors still unanimously rejects the offer, and prefers to go forward on its own while remaining open to acquisition offers from other companies.
In the statement, Paul Folino, executive chairman of Emulex, said, "We unanimously believe Emulex will deliver significantly more value than Broadcom's revised offer through the company's rapidly developing converged networking business and solid execution in our host server and embedded storage markets. While the Board is very enthusiastic about Emulex's future prospects and will continue to focus on executing the company's current strategy, consistent with the Board's fiduciary duties we would, of course, give full consideration to a bona fide offer from any party that reflects the full value of the company."
Neither Broadcom nor Emulex responded to requests for additional information.
Emulex competitor QLogic, which has also made a play for the converged networking market with its own acquisiton of 10-Gbit IP networking developer NetXen in early May, told Channelweb.com that the bid by Broadcom to acquire Emulex shows the potential for bringing storage and networking technology together.
Scott Genereux, senior vice president of worldwide sales and marketing at QLogic, said last month that Broadcom's acquisition bid shows the IT industry that the converged network adapter, or CNA, market will be huge.
While Broadcom and Emulex would have had to work some time to integrate the technologies, QLogic is already showing its second generation of CNA processors, a single-chip design with improved performance over the multichip designs previously announced.
"When we see the first of one of the big storage vendors -- EMC, Hewlett-Packard, NetApp, IBM -- announce native Fibre Channel over Ethernet directly on their storage arrays, this will really accelerate the market," Genereux said.