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Mentor makes another offer for Ikos

Posted: 21 Jan 2002 ?? ?Print Version ?Bookmark and Share

Keywords:mentor graphics? ikos systems?

Mentor Graphics Corp. has made a new offer for Ikos Systems Inc. that appears to resolve Ikos' objections to Mentor's earlier unsolicited takeover offer. But Synopsys Inc. still has a pending merger agreement with Ikos, which would have to pay Synopsys a $5.5 million breakup fee if it accepts Mentor's offer.

Ikos Systems president and CEO Ramon Nunez said his company had not yet reviewed Mentor's offer in detail, but plans to give it full consideration. "We'll be holding a board meeting as soon as practical," he said.

Though Mentor has filed a suit in Delaware to have the breakup fee provision of the Synopsys-Ikos agreement thrown out, Mentor's new proposal explicitly calls upon Ikos to pay the fee. Moreover, the new offer states that Ikos is not required to disclose any further confidential information, a sticking point that led in part to Ikos' rejection of Mentor's initial offer.

The new offer appears to put Mentor back in the race with Synopsys to acquire Ikos.

Synopsys in July announced that it would acquire Ikos for between $6 and $20 per share, but said it would not be able to close the deal until August 2002 for legal reasons. Mentor countered in December by offering to pay $11 in cash per share of Ikos immediately. Ikos' board of directors said Mentor had made the "superior offer," but recommended rejecting the offer on two grounds: that Mentor required Ikos to not pay the breakup fee; and that Mentor did not have a negotiated offer on the table.

Nunez said the removal of Mentor's requirement in its new offer that Ikos not pay the breakup fee solves one problem but raises another.

"The breakup fee would be a consequence of our decision to terminate the agreement with Synopsys, and it would be a very significant decision we'd have to make," he said. "But in terms of fiscal capability, we certainly have the cash."

Synopsys is going into "wait and see" mode, said Craig Cochran, director of corporate marketing at Synopsys.

"The ball is in Ikos' court. We'll continue to monitor developments as Ikos considers what its next step will be."

Wally Rhines, chairman and CEO of Mentor Graphics, said: "The Ikos board of directors has already determined that Mentor's offer is superior to the Synopsys transaction, and now we have delivered a merger agreement that also is clearly superior. We expect the Ikos board to follow the procedures detailed in the Synopsys merger agreement by terminating that agreement, paying the breakup fee to Synopsys and executing the Mentor agreement."

Richard Goering

EE Times

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