Broadcom Corp. (BRCM), in ending the hostile aspects of its acquisition attempt on Emulex Corp. (ELX) and raising its bid 19%, has put the pressure squarely on Emulex's board to return to the bargaining table.

Broadcom's actions, which included dropping a lawsuit against Emulex and ending an attempt to replace Emulex's board, mean Emulex has successfully fought off what it deemed a low-ball offer of $764 million, or $9.25 a share. But with a raised bid of $912 million, or $11 a share, on the table, which Broadcom suggests is its final offer, Emulex likely now needs to engage Broadcom or risk a rough reaction from investors.

So far, Emulex said it would review the revised offer with its advisers, but recommended that stockholders don't tender shares at this time.

Emulex shares dropped 8.5% to $9.96 Tuesday following the release of a letter from Broadcom Chief Executive Scott McGregor to Emulex's board. Investors look worried that Broadcom is prepared to walk away from the deal should Emulex reject the offer outright.

"The market is clearly telling you that the stock is going down and going down big if the deal doesn't get done," said Jefferies & Co. market strategist Andy Baker.

That could be a big blow to Emulex, which used a shareholder rights provision, often known as a "poison pill," to keep Broadcom from convincing Emulex investors to tender their shares. Emulex, which makes systems that link parts of company data centers, also has lobbied that Broadcom's bid was opportunistic and undervalued it.

Broadcom shares recently fell 1.8% to $24.46.

Before Monday, Wall Street had remained confident that Emulex could extract a larger premium than the $9.25-a-share offer, keeping Emulex shares well above $10 for the duration of the takeover battle. The $11-a-share offer represents a 66% premium to Emulex's share price of $6.61 before Broadcom's original bid April 21.

But now, should Emulex refuse negotiations, shares are likely to fall further. The stock may not return to preoffer valuations because of the gains made by the broader market and its peers - as well as any lingering takeover talk - but it could drop below the original $9.25 price.

With Emulex, Broadcom would be catapulted into a leadership position in a growing storage networking technology, further expanding its product lines and grabbing a strong position to challenge others, including Emulex rival QLogic Corp. (QLGC), for control of the market.

But if Emulex refuses the higher price, Broadcom could decide to try to develop the technology on its own, or partner with an Emulex rival. That would take time, but with several other business lines, this particular storage networking technology isn't vital to Broadcom's survival.

In fact, Broadcom may ultimately be better off without the Emulex deal, JMP Securities analyst Alex Guana said. He added that the latest offer "represents the company's final overture" and that "one way or another," the Emulex distraction will soon be gone.

The longer the process continues, the less attractive it is for either company, said Peter Falvey, an investment banker with Revolution Partners who isn't involved in the acquisition. For instance, suppliers and customers could get anxious about the fate of the companies, putting pressure on them to make a deal or part ways.

"This has been going on for a little bit. We're almost in July now, so it's just not a good thing overall for either company," Falvey said.

That may have contributed to Broadcom's McGregor telling Emulex in the letter that the tender offer for Emulex shares will be on the table until July 14. Broadcom will let the offer expire "if the Emulex Board has not at that time indicated its support for the transaction that we have proposed."

"If we move quickly to combine our two companies with the speed required by market dynamics, great value can be delivered now to your shareholders and future opportunities created for ours. If not, we believe it is only prudent for Broadcom to consider other alternatives," McGregor said in the letter.

At $11 a share, Emulex management "should now at a minimum begin some sort of discussion," said Emulex shareholder Ryan Carr of Sparta Asset Management.

"They really need to figure out if there is a technological or cultural fit," he said, adding that if Broadcom is serious about creating value through an acquisition, it could attract more Emulex shareholders with some amount of Broadcom equity thrown into the offer.

"Otherwise, how do current Emulex holders participate in the value creation?" he asked, in an email exchange. "We don't."

-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@dowjones.com