Mentor Graphics Corporation Agrees to Acquire Innoveda

[phillipr]

Hot news off the press.........

Wednesday April 24, 12:19 am Eastern Time
Mentor Graphics Corporation Agrees to Acquire Innoveda, Inc.
WILSONVILLE, Ore. -(Dow Jones)- Mentor Graphics Corp. (MENT) signed a definitive agreement to acquire Innoveda Inc. (INOV) for $3.95 a share cash, or about $160 million.
Mentor's offer represents a premium of 66% based on Innoveda's Tuesday closing price.
Nasdaq trading in shares of Innoveda, which has 39.9 million shares outstanding, closed Tuesday at $2.38, down 7 cents.
In a press release Tuesday, the companies said both boards approved the merger.
Shareholders representing about 39% of the Innoveda shares outstanding agreed to tender their shares in the offer, the companies said....

[randychase]

http://www.globeinvestor.com/servlet/WireFeedRedirect?cf=GlobeInvestor/config&vg=BigAdVariableGenerator&date=20020423&archive=bwire&slug=221130634

Yikes. :(

Wasn't it last year at the user's conference when we were getting introudced to the new management team of Innoveda?

What would be good would be to have some data about the direction and support for the Innoveda products. After all this time, Ver 5 FIRE/BLAZE is getting ready to ship. I don't expect that will be dropped.

[Tom]

Mentor already has proven autorouting and interactive routing technology. I personally would really like to have the Expedition Router hooked up to my PowerPCB. That would really be exciting. I have to look at this acquisition as a very positive thing for all Innoveda customers. Mentor has the best routing technology available in the EDA market today.

When this happens, it will be Mentor against Cadence and I will enjoy playing in that war.

[randychase]

One possible downside though.

I was there with PADS in the beginning. I ran a department of CADNETIX stations costing a ton of money. PADS came in during the late 80s with the marketing philosophy of 80% of the features at 10% of the price (or something like that). In fact, they sneered at the high end boys with their unix platforms and large price tags.

It was $495 plus a few options. I had a fully loaded PADS seat for less than $2k. And you got a free t-shirt.

And this gave them market share. A lot of users could afford this.

But as the years went by, PADS added those missing features and invented new ones. And each one had a price tag. They removed the basic autorouter and made into a module. Even the modules went up in price and you also paid maintenance on each one. Around 1995, the cost of a good PADS seat was $6k.

Then it was around $10-12k. And now a fully loaded seat is about $30k. And to me, the corporate philosophy seemed to be more envious of the big boys than anything.

And now they are one of the big boys.

I can see some potential positives. But I can also see that they left the low end market and they might be leaving the mddle end market too. Might be a better thing for those in companies with the budget for more expensive tools. But for small shops like mine, this can potentially be very painful.

But we shall see. In any chaos there is opportunity and it's never all bad or all good. I hope and expect that Mentor will continue to support PowerPCB and it's new version 5 release. I also wonder if they will make any deals with the Innoveda userbase to ease the transition pain.

I wonder if we shall see the presense of Mentor at the International User's Conference, or is that all pretty locked in stone now. Will Mentor spend money on the user's conference? Hmmm....

Will Mentor offer Innoveda users an upgrade path?

Will we be seeing a PCBStandards Mentor library soon?

:)

[Tom]

My big bonus take on this is Standardization. Our industry desperately needs standardization to accelerate the PCB design layout process. I'm not too concerned about the "Ticket Price" because it's not my money. I'm more concerned about functionality and performance than I am about spending money.

I believe that if a designer can produce cleaner more accurate designs at a faster pace they are able to generate more money. They should rightfully ask for more money. Yes, some of that money goes into Mentor's pocket but a lot of it goes into my bank account too.

I can't see any downside to this transaction except maybe a higher priced system. Those who can't afford it will migrate to Protel.

[randychase]

Originally posted by Tom Hausherr
I'm not too concerned about the "Ticket Price" because it's not my money.

I can't see any downside to this transaction except maybe a higher priced system. Those who can't afford it will migrate to Protel.


Yup. Pretty much what I said. I look at it a little differently since it is my money and I did not want to go to Protel. :eek:

[Mark Larson]

What gets me is the number of EDA solutions that come and go. Why so many? Are the existing tools that bad? The job is getting done, sure some might cost more or less than the next, but as for features to me it's like the Coke - Pepsi arguement, whatever you are used to is what you like, and all hell breaks loose if you change it! It makes sense to me to choose a tool and stick with it so you are competent with it.
I am wondering how the people who complain about the cost of PADS/Innoveda support in the past will complain in the future. Often they have helped even if you are not on support. From what I have seen if you are not on support with Mentor and Cadence they won't talk to you.

[Tom]

I'll try to keep this updated as information rolls in....

This is what I've heard so far is:

Mentor plans to change the name "PowerPCB" back to PADS.

PADS will be fully supported as Mentor's "Low End Tool".

Board Station will be folded into Expedition so Mentor will only have two PCB design layout tools, PADS and Expedition.

Over the next two - three years Mentor will write a full translation between Expedition and PADS to allow those who can afford to migrate up can do so seamlessly.

There should be very little change in customer support as Mentor needs the install base to remain high. This is one of the most important reasons for buying Innoveda. Only time will tell us that.

Questions that still need to be answered:

What going to happen to the following tools?
PowerLogic
Lava
Hyperlynx
ePlanner
QUIET Expert
XTK
Viewdraw
DxDataBook
DxAnalog
Blast
BlazeRoute
FireRoute
PowerBGA
CAM350 integration with PADS (this is a big one)

What is going to happen the VAR network like Hytek Services?

[Tom]

Mentor Graphics Corporation Agrees to Acquire Innoveda, Inc.

WILSONVILLE, Ore.--(BUSINESS WIRE)--April 23, 2002--Mentor Graphics Corporation (Nasdaq:MENT - news) and Innoveda, Inc. (Nasdaq:INOV - news) announced today that they have signed a definitive merger agreement providing for Mentor Graphics to acquire all of the outstanding shares of Innoveda for $3.95 per share in cash, for a total purchase price of approximately $160 million.

The boards of directors of both companies have approved the merger agreement.

Under the terms of the merger agreement, Indiana Merger Corporation, a wholly-owned subsidiary of Mentor Graphics, will make a tender offer to purchase all outstanding shares of common stock of Innoveda at a price of $3.95 per share in cash. The tender offer will be subject to certain conditions, including the receipt of all necessary government approvals and the tender, without withdrawal prior to the expiration of the offer, of at least a majority of Innoveda's outstanding shares on a fully-diluted basis.

The merger agreement provides for the tender offer, which is expected to commence by April 30, 2002, to be followed by a second-step merger in which those shares not tendered will be converted into the right to receive the same $3.95 per share in cash. Stockholders representing approximately 39% of the outstanding shares of Innoveda have entered into support agreements under which they agreed, among other things, to tender their shares in the tender offer and if necessary, to vote their shares in favor of the proposed merger.

The proposed acquisition will significantly broaden Mentor's position in both the PCB systems and wire harness design markets through the integration of Innoveda's complementary solutions. "PCB design continues to increase in complexity, requiring solutions that address challenges with advanced interconnect and signal integrity, as well as provide supply chain integration and data management," said Henry Potts, vice president and general manager of Mentor's Systems Design Division. "These challenges are placing PCB design back in the critical path for systems design and are evident whether you are creating a quick prototype or working in a complex integrated global enterprise."

"Innoveda's technology, products and roadmap provide additional components for the realization of our product strategy to address these challenges," said Potts. "Mentor is committed to the systems design industry, and intends to continue to support Innoveda's customers."

"We're looking forward to joining the Mentor team, and contributing to its leadership position in PCB and wire harness design and analysis," said William J. Herman, chairman and CEO of Innoveda. "We see a great deal of synergy in our respective product lines and development teams, and believe that the combination of our technology and Mentor's proven solutions and market presence will offer tremendous benefits to customers. New challenges in electronic systems and PCB design are driving customers to revisit their entire design solution strategy. This is a great opportunity for us as well as the systems design community."

Needham & Company and Banc of America Securities serve as the financial advisors to Mentor for this acquisition. Robertson Stephens acted as the exclusive financial advisor to Innoveda in this transaction.
Mentor Graphics Corporation Agrees to Acquire Innoveda, Inc.

WILSONVILLE, Ore.--(BUSINESS WIRE)--April 23, 2002--Mentor Graphics Corporation (Nasdaq:MENT - news) and Innoveda, Inc. (Nasdaq:INOV - news) announced today that they have signed a definitive merger agreement providing for Mentor Graphics to acquire all of the outstanding shares of Innoveda for $3.95 per share in cash, for a total purchase price of approximately $160 million.

The boards of directors of both companies have approved the merger agreement.

Under the terms of the merger agreement, Indiana Merger Corporation, a wholly-owned subsidiary of Mentor Graphics, will make a tender offer to purchase all outstanding shares of common stock of Innoveda at a price of $3.95 per share in cash. The tender offer will be subject to certain conditions, including the receipt of all necessary government approvals and the tender, without withdrawal prior to the expiration of the offer, of at least a majority of Innoveda's outstanding shares on a fully-diluted basis.

The merger agreement provides for the tender offer, which is expected to commence by April 30, 2002, to be followed by a second-step merger in which those shares not tendered will be converted into the right to receive the same $3.95 per share in cash. Stockholders representing approximately 39% of the outstanding shares of Innoveda have entered into support agreements under which they agreed, among other things, to tender their shares in the tender offer and if necessary, to vote their shares in favor of the proposed merger.

The proposed acquisition will significantly broaden Mentor's position in both the PCB systems and wire harness design markets through the integration of Innoveda's complementary solutions. "PCB design continues to increase in complexity, requiring solutions that address challenges with advanced interconnect and signal integrity, as well as provide supply chain integration and data management," said Henry Potts, vice president and general manager of Mentor's Systems Design Division. "These challenges are placing PCB design back in the critical path for systems design and are evident whether you are creating a quick prototype or working in a complex integrated global enterprise."

"Innoveda's technology, products and roadmap provide additional components for the realization of our product strategy to address these challenges," said Potts. "Mentor is committed to the systems design industry, and intends to continue to support Innoveda's customers."

"We're looking forward to joining the Mentor team, and contributing to its leadership position in PCB and wire harness design and analysis," said William J. Herman, chairman and CEO of Innoveda. "We see a great deal of synergy in our respective product lines and development teams, and believe that the combination of our technology and Mentor's proven solutions and market presence will offer tremendous benefits to customers. New challenges in electronic systems and PCB design are driving customers to revisit their entire design solution strategy. This is a great opportunity for us as well as the systems design community."

Needham & Company and Banc of America Securities serve as the financial advisors to Mentor for this acquisition. Robertson Stephens acted as the exclusive financial advisor to Innoveda in this transaction.

[Schlock_Designer]

As I see it, the only reason Mentor bought Innoveda was to block the purchase by Zuken. Zuken, needs a U.S. market share and I'm sure they were courting Innoveda. If Zuken had bought Innoveda, it would have opened them up in the U.S. market in a huge way, thus keeping the pressure on Mentor.

By buying Innoveda, Mentor stopped this, thus narrowing the field of competitors. I really see Mentor dropping what they consider "low end" products like PowerLogic, the lower end bundles of PowerPCB, thus forcing the 060/090 crowd to 160/360/500 series bundles with the Innoveda schematic.

Instead of a $4200 seat you are now looking at a $10k seat minimum.

Personally, I'm shopping around but I don't see too many options anymore.

Regards,

Schlock

[Tom]

You know, for some reason I never thought about the Zuken scenario but that is really scary. If I had a choice I would rather be with Mentor than Zuken. But that is only an opinion based on the fact that Mentor is an American company and has already established a network of offices here.

It seems that everyone wants to purchase Low Cost CAD Tools that produce High Quality PCB Designs. The only way to offset this potential price increase is to pass that cost on to our customers. The price of PCB designs is going up. Don't be paranoid about raising your prices that could potentially make your customers look elsewhere. Everyone else will be doing the same thing. That's the reality and the cost of doing business today.

[phillipr]

The Main Reason I think this may be a bad move for the User of Powerpcb is,
If Mentor keeps the tool in use they will make sure that there is a technology gap between it and their "Higher end tools.
If Innoveda had kept the Product the would have tried to bridge that gap to make them More competitive

[Tom]

Innoveda did not have a choice to sell out. Their low cost products could not pay the bills. They were $2 million in the red and no light at the end of the tunnel. Mentor on the other hand is a cash rich company and generating profits.

Everyone (customers) will have to learn that you can only purchase "Low Cost" tools so long before the vendor finally goes under. I've seen this happen too many times in the past. We "The Users" still haven't learned that we need to support the CAD vendor or watch our infrastructure go bankrupt together.

The main reason why it's a good move is because Mentor has the financial stability to increase the recourses in the future development of PowerPCB. It doesn't make sense to purchase a company for $160 million just to trash the product line. That's not Mentor Graphics MO.

We're all here in San Diego having a great time at the last Innoveda User Group meeting and everything is upbeat and positive. It seems at the moment that we have nothing to worry about except worrying about it. Don't worry, be happy.

[phillipr]

Its a shame that most of us don't realize what we have got, until it is take away!

Did any other interesting news come out of the User conference?

[phillipr]

Never mind i just found Randy's Report

[petehouwen]

I don't think we have to worry about Mentor messing with PowerPCB. they have been trying for years to get a "lower-end" tool for those who can't afford, and don't need Boardstation. I would presume that they have a very specific plan in place to maintain PowerPCB's position in the market. If you're ready for more, you'll move up to Boardstation. If PowerPCB does the job now, be happy. If not, you were going to have to spend more anyway.

I previously used Mentor. I see this move as good for everyone.

[Skip Yutkus]

Can anyone tell me why using BoardStation would be a move up from Innoveda? I've been using BoardStation for almost 3 years and I see absolutely no advantage - yes you can link to some very good simulation tools if you want to spend a whole lot of money, but those tools, (ICX), have a Pads interface, and the routing tools in BoardStation quite frankly are terrible unless you have AutoactiveRE - which is the Expedition routing environment.

I posed this question to some Mentor guys several years ago and the answer I got was - "If you use Mentor you will make more money".

Anyway why is Mentor regarded as such a sophisticated tool for board design? I am really curious.

Skip