US company’s $156 million offer for Endace in the mail

Shareholders in tech company Endace will receive the formal offer for US company’s Emulex’s $156 million takeover within days.

California-based, NYSE-listed Emulex (NYSE:ELX) is offering 500 pence per share for all of the network security company Endace, founded by entrepreneur Selwyn Pellett (who resigned from the board in 2010 and sold most of his shares at the same time).

Using the current exchange rate of 1.62 USD to the Pound, the offer represents, a 65% premium to the mid-market closing price per Endace shares on December 6, when the offer was announced.

The Endace board unanimously recommends that all shareholders and optionholders accept the Emulex offer.

A copy of the Grant Samuel report, commissioned by Endace’s independent directors, and Emulux’s offer should be received by all Endace shareholders within the next few days.

The transaction is expected to be completed in the March 2013 quarter, subject to certain closing conditions, including the acceptance of the offer by the holders of 90% of the outstanding shares of Endace.Endace's technology allows its customers - which include government security agencies - to monitor network traffic.

Although listed on the London Stock Exchange's AIM board, most Endace staff, and the manufacturing for its network cards, are in New Zealand.

Endace - which was born out of research at Waikato University - has received more than $11 million in direct government grants.

The Emulux takeover has reignited debate over no-strings-attached taxpayer handouts.

Mr Pellett's own hand-wringing about the sale saw him receive a ticking off by Economic Development Minister Steven Joyce on Twitter.

Chief executive Mike Riley says joining forces with Emulex will create a new generation of network visibility solutions and take them to a global market.

“Endace and Emulex share a common vision and have a strong cultural affinity, making the combination a great fit for both companies.”

Emulex chief executive Jim McCluney says in a statement the company is committed to proceeding quickly with the deal.

“Acquiring Endace doubles our total addressable market and places Emulex in another high-margin, high-growth market, enhancing our ability to deliver industry-leading solutions to connect, monitor and manage high-performance networks,” Mr McCluney says.