Thursday July 2, 09:58 PM
Delaware judge to weigh Emulex investor lawsuit
By Martha Graybow
NEW YORK, July 2 (Reuters) - A Delaware judge is expected next week to consider the fate of an investor lawsuit against Emulex Corp (NYSE: ELX - news)
's board of directors that could, if successful, help Broadcom Corp in its quest to acquire the storage technology company.
A conference is scheduled Monday morning on whether a trial in the case, set to begin on Wednesday, can go forward. The conference is before Vice Chancellor Leo Strine of Delaware Chancery Court.
The lawsuit, brought by individual Emulex shareholder Reid Middleton, seeks to force the company's board to get rid of a so-called 'poison pill' and other anti-takeover defenses so that shareholders can consider Broadcom (NASDAQ: BRCM - news) 's cash tender offer directly.
Broadcom, a wireless chipmaker, this week raised its bid to $912 million, up from $764 million, and changed the tenor of its previously hostile bid in what it called a final effort to engage the Emulex board.
'This lawsuit seeks to let the Emulex shareholders decide for themselves the fate of their corporation, instead of letting the Emulex board just say no until Broadcom walks away,' Mark Lebovitch, a partner at law firm Bernstein Litowitz Berger & Grossmann LLP, said on Thursday.
Lebovitch's firm is lead counsel on the case for the plaintiff, along with law firm Grant & Eisenhofer PA.
After Broadcom raised its bid, Emulex said it plans to review the offer and make recommendations to shareholders. It also filed papers with the Delaware court seeking an indefinite postponement of the trial, citing the new Broadcom offer.
An Emulex representative was not immediately available to comment on the case on Thursday.
Wall Street analysts say there is no guarantee the new offer will be acceptable to Emulex's board. Emulex executives repeatedly have told investors the company can independently boost its stock price through long-term growth prospects.
Broadcom itself had brought legal action challenging the validity of Emulex's poison pill and a supermajority voting requirement to repeal changes to its bylaws. Broadcom said this week it will abandon that legal action.
Proxy advisory firm RiskMetrics said in a report this week there was 'a reasonable possibility' that the judge could allow the trial in the investor case to go forward.
The case could potentially provide 'new and important precedent' on when a poison pill can be withdrawn under Delaware law, RiskMetrics said.
Broadcom's revised bid raises its per-share offer to $11 from $9.25. Emulex shares closed down 3.7 percent at $9.46 on the New York Stock Exchange on Thursday.
(Reporting by Martha Graybow; Editing by Gary Hill) Keywords: BROADCOM/EMULEX
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