Network gear maker Emulex to buy back shares, reconstitute board
(Reuters) - Network equipment maker Emulex Corp (ELX.N) will buy $200 million of its shares and reconstitute its board, following pressure from two of its major shareholders.
Shares of the company were up 2.5 percent in extended trading.
Activist hedge fund Starboard Value LP and Altai Capital had been agitating to include shareholder advocates on the Emulex board.
Emulex, which makes switches and adapters that help computer servers and storage networks transfer data, said on Monday it will add three independent nominees to its board. The company will also reduce its board size to 11 from 12.
Executive Chairman Jim McCluney, who was the CEO until July, will leave by February and not stand for re-election to the board at the next shareholders meeting, the company said.
The company said the first $100 million of the share repurchase plan will be completed by the end of June 2014. The company expects to initiate the second $100 million buyback immediately after that.
Emulex said it collaborated with key shareholders to formulate the strategic actions.
Elliott Management, the company's largest shareholder, said it supported the plan.
Emulex also said it will reduce annual expenses by $30 million by simplifying its portfolio and ending programs with lower returns on investment.
The company said it expects to take a charge related to further operating expense reductions in its second quarter ending December 30.
Emulex shares closed at $7.54 on the New York Stock Exchange.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Sriraj Kalluvila)