Starboard Takes Emulex Stake as Search for Buyer Starts

Investment firm Starboard Value LP said it has acquired a 6.9 percent stake in Emulex Corp., a chipmaker that’s seeking potential buyers.

Starboard owns 6.25 million shares of Costa Mesa, California-based Emulex, the investor said in a U.S. Securities and Exchange Commission filing yesterday.

Emulex has hired Goldman Sachs Group Inc. to seek potential buyers, two people with knowledge of the situation said last week. They asked not to be identified because the process is private. Before today, Emulex had declined 21 percent since rejecting an $11-a-share bid from Broadcom Corp. in 2009, leaving it with a market value of $694.2 million.

Activist investor Elliott Management Corp., the hedge-fund firm founded by billionaire Paul Singer, is Emulex’s largest shareholder with about 10 percent of the stock. Emulex added two Elliott appointees to its board under a standstill agreement in March that permits Elliott to wage a proxy battle or initiate a tender offer as early as Aug. 12 under certain conditions, according to a statement at the time.

Emulex shares rose 2.9 percent to $7.86 at the close in New York. The stock has climbed 18 percent since July 2, the last trading day before Bloomberg News reported that the company had hired Goldman Sachs.

Emulex, which sells chips that help computer servers and storage networks transfer data, traded as high as $109.61 in 2001 before dropping to $4.53 in March 2009 as the recession and weakened demand crimped profit. In July 2009, Emulex said Broadcom’s sweetened $11-a-share takeover bid undervalued its clean balance sheet and long-term expansion prospects.

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