Cadence Design makes public its $1.6 billion offer for Mentor Graphics

By Lisa Kerner

Charlotte, N.C., June 17 - Cadence Design Systems, Inc. announced it offered to acquire Mentor Graphics Corp. for $16 per share in an all-cash deal valued at $1.6 billion, including Mentor Graphics' net debt of $69 million.

In its proposal to Mentor Graphics' board of directors, Cadence Design noted the acquisition is not subject to a financing condition and that the offer price is a 30% premium over the closing price of Mentor Graphics common stock on June 16, one day prior to public disclosure of the offer, a Cadence Design news release stated.

The per-share offer price is a 59% premium over the closing price of Mentor Graphics common stock on May 2, the date Cadence Design said it first presented the terms of the proposal to Mentor Graphics.

Cadence Design said it has tried to discuss the proposal with Mentor Graphics for two months, claiming Mentor Graphics has been "unwilling to meaningfully participate in such discussions."

Mentor Graphics chairman and chief executive officer Walden C. Rhines said in a company statement that the offer price was determined to be insufficient.

In addition, the risks of not gaining regulatory approval would jeopardize completion of the transaction, Rhines said in a Mentor Graphics news release.

In the Cadence Design release, senior vice president and chief financial officer Kevin S. Palatnik said, "We believe the combination of Cadence Design and Mentor Graphics delivers significant benefits to both companies' shareholders that are simply too compelling to ignore.

"It remains our strong preference to work cooperatively with Mentor Graphics, and to immediately commence discussions with Mentor Graphics regarding our proposal."

Deutsche Bank Securities Inc. and Davis Polk & Wardwell are advising Cadence Design, a San Jose, Calif.-based computer software and hardware developer.

Mentor Graphics provides electronic hardware and software design solutions, products, consulting services and support for electronics and semiconductor companies. The company is located in Wilsonville, Ore.

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