Shareholder asks Emulex to consider sale
Feb 21 (Reuters) - Altai Capital, a major shareholder in network equipment maker Emulex Corp, urged the company to consider selling itself, among other options, and called its decision to buy New Zealand-based Endace Ltd "perplexing."
Emulex should have used its cash balance to buy back undervalued shares instead of the $130 million acquisition of Endace, said Altai, which owns about 5.4 percent of Emulex's shares.
A share repurchase remains an option for Emulex, which used about 60 percent of its cash in hand to buy Endace, Altai said in a letter to Emulex Chief Executive James McCluney.
Emulex said on Feb. 12 that it had acquired 88 percent of Endace, which makes network monitoring and recording solutions for high-speed networks. The company offered to buy Endace in December.
Altai Chief Investment Officer Rishi Bajaj urged Emulex to add members with a "greater economic stake" to its board. He also asked the company to consider a range of options including selling itself and pursuing profitability over growth.
Broadcom Corp had offered to buy Emulex in 2009 for about $764 million in a bid that turned hostile.