Mentor offers to buy IKOS for $102 million in move to block Synopsys

Mentor offers to buy IKOS for $102 million in move to block Synopsys
By Semiconductor Business News
December 10, 2001 (12:44 p.m. EST)
URL: http://www.eetimes.com/story/OEG20011207S0009

WILSONVILLE, Ore. -- Mentor Graphics Corp. here today announced an unsolicited offer to acquire IKOS Systems Inc., a supplier of design verification technology, for $102 million in cash. San Jose-based IKOS had agreed in the summer to be acquired by Synopsys Inc. in a deal that is not expected to close until August 2002 (see July 2 story).

Mentor's unsolicited offer to buy IKOS outstanding stock at a price of $11 per share comes four days after Synopsys announced it had agreed to purchase Avanti Corp. for nearly $780 million in stock--an acquisition that would be the largest in design automation history (see Dec. 3 story). Mentor sent an open letter to the IKOS board of directors arguing that its proposal was better than the pending acquisition agreement with Synopsys.

"Our offer makes strategic sense for both companies," said Walden C. Rhines, chairman and chief executive officer of Mentor in Wilsonville. "Our acquisition of IKOS will add to Mentor's existing products a proven and complementary emulation product line. IKOS products provide a mid-range verification solution to customers desiring a lower price point solution.

"Acquiring IKOS will also provide Mentor with North American sales and service capabilities in the emulation arena that we will leverage across our entire product line," Rhines said.

"For IKOS, our all-cash offer is clearly superior to the present agreement with Synopsys. The Synopsys proposal is subject to onerous closing conditions that IKOS may well not be able to satisfy in the current environment," Rhine said, referring to continued weakness in the semiconductor industry. "It is also subject to an uncertain price payable no earlier than August 2002. Our offer is for cash at a price significantly higher than the present trading price and can be consummated quickly, more than seven months earlier than the Synopsys proposal."

An immediate response was not available from Synopsys. IKOS directors today said they will consider the offer and respond by Dec. 20.

In its letter to the IKOS board, Mentor said its $11-per-share offer represented a premium of 87% over the average closing prices of IKOS stock since June 29. Mentor said it currently owns 9.1% of IKOS's outstanding common stock.