Electronics and semiconductor design software house Mentor Graphics Corp has launched an unsolicited bid to acquire Quickturn Design Systems Inc. Mentor announced a cash tender offer for all outstanding shares of Quickturn, which makes hardware emulation systems to test chip designs, at a price of $12.125 per share. The offer represents a 51.6% premium over Quickturn’s $8 closing price on Tuesday and values the San Jose- based company at roughly $216m. A senior executive at Quickturn told the Wall Street Journal that the company was unaware of Mentor’s interest prior to the offer and hinted that the bid might trigger the company’s poison pill anti-takeover plan into action. Quickturn’s board said it would study the offer and make its recommendations to shareholder in due course. The deal makes sense from Mentor’s point of view, with its focus on the software side of electronic design automation and Quickturn’s complementary hardware emulation expertise. The two companies have also sued each other in the past, and Mentor sees acquisition as a fine way to avoid costly legal issues. In what is perhaps counting its chickens before they’re hatched, Mentor already projects that after a six-month integration period following the closing of the deal, Quickturn would be accretive to earnings per share. It also figures to realize $30m in cost savings in 2000 after the elimination of certain duplicate functions and staff. The tender offer is scheduled to expire at midnight, New York time, on September 9, unless Mentor chooses to extend it. Mentor said it has the necessary financing in place to consummate the deal and thus there are no financing conditions associated with the offer. It also said that its commitment to the deal should be apparent from the fact that it had already purchased more than 3% of Quickturn’s common stock. Quickturn has seen its share of financial difficulty as of late, with sales in Asia slowing. It reported a second-quarter loss of $5m, on revenue that fell to $23.9m from $26.4m, against net income of $720,000, or $0.04 per share, in the year-ago period. Quickturn’s share price has also seen a sharp downturn, having traded as high as $15 in February. Mentor, meanwhile reported second quarter net profits down 78.5% at $804,000 on revenues up 3.9% at $119.1m. In Wednesday’s trading Mentor shares rose $0.125 to $9.375, while Quickturn jumped $3.0313, or nearly 38%, to $11.0313.
