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Cadence raising $350M for possible acquisition

Posted: 13 Aug 2003 ?? ?Print Version ?Bookmark and Share

Keywords:Cadence Design? EDA tool?

Cadence Design Systems Inc. is selling off stock to buy back $100 million of its own stock and for "general corporate purposes," according to a statement released.

Cadence refused to comment beyond its statement, but analysts said some of the money could be used to acquire other companies.

Cadence issued a $350 million principal amount of zero coupon along with zero-yield senior convertible notes due in 2023 that will be offered and sold to qualified institutional buyers. It expects to grant initial purchasers an additional $50 million principal amount of senior convertible notes, according to the statement.

Cadence said it intends to use a portion of the proceeds to purchase up to $100 million of shares of its common stock concurrently with, and possibly after, pricing of the notes. The repurchases are pursuant to Cadence's previously announced stock repurchase program.

Cadence also said it intends to enter into a convertible bond hedge transaction with one of the initial purchasers. The transaction focuses on common stock and is intended to limit potential dilution from conversion of the notes.

The company said it would also execute a call option transaction with one of the initial purchasers. Cadence said it expects to expend a total of approximately $63 million in net proceeds of the offering in connection with the two transactions.

The statement did not specify what actions it includes under "general corporate purposes," and Cadence officials refused to comment on the action filed Monday with the Securities & Exchange Commission.

Analysts said the $187 million or more balance could be placed on Cadence's quarterly books, used for acquisitions or to pay severance.

Cadence competitor Mentor Graphics Inc. issued a similar note last month to raise $100 million, specifying in its announcement that it could use the money for acquisitions.

The timing of the two transactions may indicate that there is a bidding war for another junior EDA firm such as Magma Design Automation, Synplicity, Verisity, Terra Systems, Nassda, or Monterey Design.

Cadence could also use the money to right itself since it has been struggling the last two quarters and laid off over 500 employees in July to reduce costs.

- Michael Santarini

EE Times





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