Proxy Governance Recommends Emulex

Broadcom Corporation announced that PROXY Governance, Inc. has recommended that Emulex shareholders vote in favor of Proposal 1 in Broadcom’s Consent Solicitation. This proposal – which is the single most important proposal before Emulex shareholders – would give shareholders the option to call a special meeting at which they may voice their interests.

"PROXY Governance’s recommendation today in favor of the right of shareholders to hold a special meeting is a positive development that shifts the leverage away from Emulex’s insular board, and reinforces our view that Emulex shareholders should be given the right to make their voices heard at a special meeting of shareholders," said Scott A. McGregor, Broadcom’s President and Chief Executive Officer. "At the same time, we disagree with PROXY Governance’s conclusion with respect to the other proposals in Broadcom’s Consent Solicitation. First and last, the provisions in this Consent Solicitation are about Emulex shareholders and their right to make a decision. We urge Emulex shareholders to vote for all proposals in our Consent Solicitation so that they have a full and unfettered opportunity to be heard on our offer."

The proposals would give Emulex shareholders more rights and a forum to express their interests without any future obligations to tender shares, agree to a sale, or add or remove Board members, Broadcom noted. At the meeting, Emulex shareholders could vote in whatever manner they feel best represents their interests, the company said.

"We are prepared to complete a transaction quickly to provide Emulex shareholders with cash at a significant premium as soon as possible. We also continue to favor collaborative discussions with Emulex and we have indicated a willingness to further evaluate our offer if Emulex will agree to provide new and material information with respect to its valuation that is not ascertainable from public information. However, to date Emulex’s Board and management have remained largely unresponsive, promoting misleading and irrelevant statements and expensive litigation. We urge Emulex shareholders to consent to Broadcom’s proposals so that a special meeting may be called and shareholders may express their views without further delay and expense. Delays mean greater uncertainty for customers and employees, whose support will be crucial regardless of the outcome, and delays will add to everyone’s opportunity costs," McGregor added.

The company noted that it disagrees strongly with the PROXY Governance evaluation of the financial attractiveness of its offer, noting that the offer represents a substantial premium on the basis of a number of measures not, apparently, taken into account by PROXY Governance, including premium to future street expectations, premium to core business value, and premium to Emulex’s CY 2010 price-earnings (P/E) multiple. In addition, the Broadcom offer represents a substantial premium to the average premium for technology mergers and acquisitions since 2005.

"We have made an all-cash offer that would deliver a significant premium and a high level of certainty. Conversely, we urge investors to weigh carefully the significant risks if Emulex continues as a standalone company, given its long history of stock price underperformance relative to its peers and the market. Emulex has failed to execute, and its design wins have not resulted in significant revenue growth or increased market share for the company," said McGregor.