Summit Design Inc has agreed to merge with fellow electronic design automation company ViewLogic Systems Inc in a stock-for- stock deal, the two announced yesterday. Summit will issue 16.2 million shares for all outstanding shares of ViewLogic, valuing the company at around $57.6m at yesterday’s closing price. Beaverton, Oregon-based Summit focuses on mixed-language design creation and verification tools for system-on-a-chip designers, while privately-held Viewlogic, from Marlboro, Massachusetts, sells design tools for the printed circuit boards and field programmable gate arrays that are needed for electronic products.
Both companies have had a checkered history in the recent years of widespread consolidation in the EDA industry. Summit, itself formed out of the merger of Beaverton-based Test Systems Strategies Inc and Israel’s SEE Technologies Ltd in February 1994, attempted to buy OrCAD Inc for $72m in September 1998 (CI No 3,502) only to call the whole thing off in February of this year. It did, however, complete the acquisition of Finnish verification house ProSoft Oy. The original Viewlogic Systems Inc was swallowed up for $500m in October 1997 by Synopsys Inc (CI No 3,270). But Synopsys was only interested in the tools for application specific integrated circuit (ASIC) design, at the time accounting for around 60% of the revenue, and a year later spun-off the remaining system level design portion under the original name (CI No 3,517), retaining an equity stake of just under 15%. Viewlogic agreed to acquire electromechanical design and analysis tool company Transcendent Design Technology Inc in August, which will also be included in the merger.
Combining the two operations will enable both process and design functions to be covered under a single company, said Will Herman, president and CEO of ViewLogic, who will become chairman, president and CEO of the new firm, which is to be renamed. We plan to deliver eProduct Design Automation systems that enable engineers to deal with concept, design and verification issues covering the entire process of creating electronic products, said Herman. That would eliminate costly bottlenecks downstream in the design process, he said.
Summit has hit hard times over the last nine months. For the six months ended in June 1999, revenue fell 34% to $14m, and the company posted a net loss of $3.2m, compared with profit of $2.9m in the same period last year. License revenue fell, largely due to the loss of a major OEM agreement with CSC at the end of the year for its Visual TestBench product line. Sales to CSC had accounted for around 25% of total revenue in the previous year. The called off OrCAD merger cost the company an additional $1m. CEO Richard Davenport agreed to step down in July.
The acquisition will be accounted for as a purchase by Summit, but Viewlogic comes out on top, with its Marlboro base as headquarters and its key executives left in charge. Aside from Herman as CEO, Rick Lucier, chief financial officer of ViewLogic, will retain his original role. Guy Moshe, chief technology officer at Summit, becomes senior VP and general manager of Israel operations. William Botts, who took over the role of chairman and interim CEO of Summit at the end of July from Davenport, will serve on the board. The combined firms currently employ 460 people worldwide. á
