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Mentor ambushes bitter rival with hostile bid

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Internet Security Threat Report 2014

An outstanding patent dispute between rival graphics emulation companies could be brought to an abrupt halt by an unexpected acquisition. Mentor Graphics shocked market watchers by launching a hostile takeover bid for Quickturn Design, the market leader in the emulation market. Mentor has offered to pay Quickturn shareholders $12.125 per share of outstanding Quickturn stock in a cash deal valued at $216 million. The bid is being seen as particularly generous, as it is well above market value - last year Quickturn's returned a loss of $5.3 million on sales of $110 million. But even if Mentor is successful in its hostile takeover bid, some pundits think that is when its troubles will really begin. John Barr, managing director of US based analysts Needham and Co,said: "Quickturn's business over the next two quarters is going to get hit real bad. And then, assuming Mentor succeeds, the Quickturn part of Mentor will also get hit hard and will be dilutive in terms of earnings per share." Barr said that by the time things improved it could be too late for Mentor to benefit significantly: "By the third or fourth quarter Mentor will start to realise some of the synergies simply because the revenues are under control. Whether or not they will be able to grow the business from there remains to be seen." Quickturn's board has until 26 August to make recommendations to its shareholders. Mentor already owns around four per cent of its rival. Bernd Braune, senior vice president at Mentor was putting on a positive air: "I believe it will be a friendly co-operation. We feel our offer is fair to the shareholders." He continued: "Customers think both companies should stop the litigation." The litigation has resulted in Mentor being barred from selling its Celaro emulation tool in the US, relying on sales from Europe and Asia.

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