Mentor Graphics Corp. was first approached about a cash buyout on April 16, getting terms of a potential deal from Cadence Design Systems Inc. on May 2. The deal is valued at $1.6 billion, including $69 million in debt. Mentor refused to engage in talks with Cadence, saying it would rather remain independent. San Jose, Calif.-based
Cadence took the offer public on Tuesday.
Cadence's advance may have prompted Mentor, a Wilsonville, Ore.-based software maker, to launch on May 9 a hostile £23.6 million ($46.1 million) offer for engineering software maker Flomerics Group plc of Hampton Court, England. Flomerics, calling the offer too low, in turn announced talks with Autodesk Inc.
Cadence itself has been the subject of M&A talk. The Deal reported on June 4 that Cadence was in talks with private equity firms about a buyout. But "[electronic design automation, or EDA,] is very technologically driven and
has to reinvent itself every several years," said Kim Frank, formerly the corporate vice president of M&A at Cadence. "I don't know if that is the appropriate domain for a private equity firm."
In a letter to Mentor chairman and CEO Walden Rhines, Cadence said its leadership team and advisers will meet with Mentor and its advisers at the earliest convenience to conduct the necessary due diligence and negotiate a merger agreement. Cadence hired Deutsche Bank Securities Inc. as a financial adviser and Davis Polk & Wardwell as legal counsel.
More to come from Tech Confidential and TheDeal.com. -
Baz Hiralal Cadence proposes to acquire Mentor Graphics for $16.00 per share in cash
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