Cadence Design Systems Inc (CDNS)

[eastunder]

More on: Cadence withdraws proposal to buy Mentor Graphics

Friday , August 15, 2008 15:12ET

Aug 15, 2008 (San Jose Mercury News - McClatchy-Tribune News Service via COMTEX) -- Cadence Design Systems withdrew its $1.5 billion offer to buy Mentor Graphics, an Oregon-based rival in the field of software for making computer chips, blaming Mentor's unwillingness to negotiate a deal.

There was no immediate statement from Mentor Graphics, which had publicly rejected the offer on the grounds that it felt the $16-per-share cash offer was too low and that regulators were unlikely to approve.

Cadence reported a decline in profits in its last quarter on July 23, but chief executive Mike Fister said then that he was committed to pursuing the deal. He also said Cadence had acquired about 4.7 percent of Mentor's stock.

But in a statement Friday morning, San Jose-based Cadence said it would drop the bid and that its board had instead authorized spending $500 million to buy back Cadence stock.

The statement said in part that "despite our best efforts, Mentor Graphics board and management were unwilling to engage in substantive discussions on what we believe would have been a compelling opportunity to create significant value for both companies' shareholders and customers."

But the statement went on to say that Mentor's reluctance made it more difficult for Cadence to secure financing for the deal. "That, along with our revised outlook and the present economic climate, led us to conclude that financing terms for the transaction are no longer attractive for our shareholders."