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Is Cadence thinking of traversing the private route?

Posted: 06 Jun 2007 ?? ?Print Version ?Bookmark and Share

Keywords:private equity buyouts? chipmaker? EDA house?

According to the The New York Times, Cadence Design Systems Inc. is in discussion with equity firms to go private.

The report stated that Cadence has been in talks with Kohlberg Kravis Roberts and The Blackstone Group.

Shares of the EDA firm were up 7 percent to over $24 in heavy trading on Monday (June 4) afternoon. Recently, Cadence reported first quarter 2007 revenue of $365 million, an increase of 11 percent over the $328 million reported for the same period in 2006. On a GAAP basis, Cadence recognized net income of $44 million, or $0.15 per share on a diluted basis, in the first quarter of 2007, compared to $22 million, or $0.07 per share on a diluted basis, in the same period in 2006.

If Cadence goes private, the move would represent one of the first EDA houses to go down that route. Chipmakers Freescale Semiconductor Inc., NXP Semiconductors and others have gone private, while Advanced Micro Devices Inc. (AMD), Micron Technology Inc. and others are reportedly mulling over a similar plan.

Some were unsure about a buyout in the EDA industry, however. A private equity buyout would probably be a good deal for Cadence management and existing shareholders, but not necessarily customers, said Erach Desai, analyst at America's Growth Capital.

"For cost savings, they're going to slash expenses, and that means people," Desai said. "Some cuts in sales and marketing may be justified, but they're also going to push into R&D and applications with cuts too."

- Mark LaPedus and Richard Goering
EE Times

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