Sellingoff-->Emulex Acquires Giganet Inc.; Acquisition to Extend Emulex Fibre Channel
Storage Networking Leadership to VI and IP Solutions
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COSTA MESA, Calif.--(BUSINESS WIRE)--Dec. 7, 2000--Emulex Corp.
(Nasdaq:EMLX), the world's leading supplier of Fibre Channel host
adapters, Thursday announced a definitive agreement to acquire
privately held Giganet Inc. of Concord, Mass., a leading developer of
Virtual Interface (VI)-based IP networking solutions.
Upon completion of the transaction, Giganet will become the IP
Networking Group of Emulex, and Neil Ferris, Giganet president and
CEO, will assume a seat on Emulex's board of directors. The combined
companies will offer the industry a wide range of storage networking
technologies, enabling OEM customers to go to one source for best in
class Fibre Channel and IP-based storage networking host bus adapters
(HBAs).
Under terms of the agreement, Emulex will acquire Giganet for
approximately 4.0 million shares in common stock and assumed options
(before giving effect to Emulex's recently announced two-for-one
stock split). Based on Emulex's Dec. 6, 2000, closing stock price,
the transaction has a current aggregate value of approximately
$645 million.
The boards of directors of each company have approved the
acquisition, which is expected to close during the third fiscal
quarter ending April 1, 2001, subject to customary closing conditions
and regulatory approvals. The acquisition will be accounted for using
the purchase method of accounting.
Upon completion of the transaction, Emulex expects to record a
one-time non-cash charge against earnings of approximately $10 million
for purchased in-process research and development. Excluding non-cash
acquisition-related charges, the acquisition is expected to be
non-dilutive to pro-forma earnings per share for the fiscal year
ending July 1, 2001.
"The acquisition of Giganet extends Emulex's leadership position
in storage networking host bus adapters from Fibre Channel into the IP
arena," said Paul Folino, president and CEO of Emulex. "As a result of
this acquisition, SAN and NAS OEMs will be able to obtain best-of-breed
storage networking host bus adapters spanning both Fibre Channel and
Ethernet, all from a single supplier.
"Furthermore, we expect Giganet's technology leadership in VI
architectures to provide critical time-to-market benefits for Emulex
customers, as VI emerges as a core enabling technology for higher
speed gigabit networking architectures."
"Emulex's market leadership in Fibre Channel SAN connectivity
strongly complements Giganet's strategic focus on IP-based storage
networking," said Ferris. "With the pace of bandwidth expansion
accelerating, and VI-enabled applications now emerging across the
NAS and database sectors, we believe the market is poised for rapid
adoption of VI-enabled host bus adapters.
"For example, Giganet's recently announced design win from Network
Appliance for its upcoming family of VI over IP host bus adapters
promises to set new high-performance benchmarks in the network
attached storage industry. We expect employees and customers alike
to benefit from the collective technology leadership and financial
strength of this combination."
With demand for Emulex's Fibre Channel HBAs running ahead of
expectations, Emulex now anticipates sequential growth of 28%-30% in
Fibre Channel revenue for its second quarter ending December 2000, up
from earlier expectations of 20%-25%.
"With the incremental revenues from our Fibre Channel business,
and expanding Fibre Channel backlog, Emulex is well positioned to
maintain its 30% operating margin objectives on a pro-forma basis,
excluding non-cash acquisition-related charges relating to the Giganet
acquisition that we expect to incur in our third fiscal quarter,
ending April 1," noted Mike Rockenbach, chief financial officer of
Emulex.
"Based on market research expectations of 10%-12% long-term
quarterly sequential growth for the Fibre Channel HBA industry, Emulex
now believes that it can achieve revenue of approximately $285 million
and $1.48 in pro-forma earnings per share for the fiscal year ending
July 1, 2001, excluding acquisition-related charges."
A webcast that will outline the Giganet acquisition has been
scheduled for 2 p.m. PST, Thursday, Dec. 7, 2000. Interested
participants may access the webcast, which will include a simulcast
slide presentation, via Emulex's Web site at www.emulex.com. The
webcast will be archived on the Emulex Web site. |
