December 07, 2009
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Flomerics' second product,
FloVENT, was released in early 1990. This product simulates airflow in buildings and is used to optimize heating, ventilation and air conditioning.
In 1995 Flomerics went public with a listing on the London Stock Exchange Alternative Investment Market.
In 2005 Flomerics acquired the Hungarian-based thermal test equipment company,
MicReD. The addition of this technology to Flomerics' portfolio represented an important step in providing a complete, integrated solution to customers in the electronics industry.
In 2006 Flomerics acquired the German-based company
Nika GmbH together with a new breed of CFD software (now called
FloEFD) that could be fully embedded in the mainstream mechanical design environment (e.g. Dassault Systemes & PTC) and enables mechanical design engineers to analyze and optimize complex fluid flow and heat transfer processes across a wide range of products and industries. Some seven key technologies distinguish the
EFD product family from traditional CFD software, arguably making it quicker and easier to use, more robust, and more accurate. Today, the FloEFD product family is tightly embedded with leading 3D mechanical computer-aided design (MCAD) software such as SolidWorks, Pro/ENGINEER and CATIA V5.
The Nika GmbH acquisition also gave Flomerics access to a Russian software development team in
Moscow, and this team remains available to this day to MGC MAD, along with the original Flomerics development teams in
In early 2008, Flomerics celebrated its 20th anniversary as an independent company, placing it into an elite group of companies that had survived for two decades. According to Mr. Tatchell, this landmark was a testimony to the company's high-integrity, people-oriented culture and its core concept of delivering engineering simulation software for use by designers and engineers rather than just full-time analysts and specialists. In early 2008, Flomerics had just completed a record-breaking fiscal year wherein it had achieved a new high in revenue and had seen its worldwide customer base grow to over 2,500 sites and over 7,000 individuals.
Speaking in late January 2008, Flomerics’ Marketing Director
next 20 years by targeting ever broader sections of the market with simulation software that accelerates product design,”
At this juncture, Flomerics operated two main offices, one in England called FLOMERICS LIMITED, 81 Bridge Road, Hampton Court, Surrey KT8 9HH; and the second in the USA called Flomerics Inc. US Headquarters, 4 Mount Royal Ave., Suite 450, Marlborough, MA 01752, along with many regional offices worldwide.
In early 2009, Flomerics had some 220 employees worldwide and its top five executives were as follows:
Chief Executive Officer
Group Finance Director
Director of Marketing and Director of Flomerics Limited
Regional Director of Asia Pacific and Director of Flomerics Limited
Director of Software Development and Director of Flomerics Limited
Flomerics Group Plc since January 21, 2005. Mr. Carter further served as a Director of ANSYS Europe Limited and ANSYS France, and as a Director of ASN Systems Limited and CFX Limited. He studied Mathematics at Leeds University followed by a PhD in Computational Fluid Dynamics.
MGC and Flomerics:
According to Erich Buergel, Flomerics itself had in the past, on its own, developed interfaces to certain MGC software products as ways to assist Flomerics’ customers.
Mentor Graphics became interested in closer ties to Flomerics, and by the end of March 2008 MGC had acquired 26% of Flomerics in two transactions. First, MGC bought a 20% stake in Flomerics from Pricap Venture Partners AG. Then a week later investment group Bluehone sold its 6% stake in Flomerics to MGC on March 18, 2008 at a 67% premium over market price at the time of the sale.
There were definite suggestions at the time that MGC was eventually looking to acquire all of Flomerics.
Alas, the path to full MGC acquisition was not so smooth. MGC’s first offer to acquire the rest of Flomerics occurred in April or early May 2008, but the unsolicited MGC cash offer was rejected by Flomerics’ board of directors as being too low. For its part, MGC maintained that the offer valued Flomerics at $49.7 million, which represented a premium of 19% to the closing price per Flomerics share on May 8, 2008. Flomerics stated at the time that it intended to explore other alternatives, including potential interest expressed by other parties such as
Autodesk. Flomerics shares surged the day after rejecting the MGC buyout offer.
MGC apparently made several more bids to buy out Flomerics, but at the same price as originally proffered, and Flomerics rejected each of these offers. In early June 2008, Autodesk indeed confirmed its interest in Flomerics.
MGC was distracted later in June 2008 when an unsolicited offer from rival Cadence to acquire all of MGC itself for some $ 1.6 billion became public information.
A Major Distraction, more so for Cadence than MGC, as it turned out:
Indeed, CADENCE (San Jose, CA) had been in fact pursuing MGC in the spring of 2008. CADENCE, SYNOPSYS, and MGC were during Q2 2008 the Big 3 EDA vendors, in that order revenue size-wise. Founded in 1981, MGC had reported revenues in 2007 of about $850 million. CADENCE was founded in 1988 and sported revenues of more than $1,600 million in 2007.
Rumor had it that CADENCE several months earlier had privately approached MGC on a “friendly basis” regarding an all-cash acquisition, but CADENCE was privately rebuffed. Then on June 17, 2008, CADENCE revealed publicly that its offer to MGC was for $16 per share, a 30% premium over MGC’s closing price on June 16, 2008. Industry sources then reported that CADENCE had just switched strategies and had begun pursuing a hostile takeover of MGC.
MGC immediately issued a public statement again rejecting the CADENCE offer on two grounds - that it was too low and that the merger would have trouble passing federal antitrust review. "For these and other reasons, our board unanimously rejected the proposal," wrote MGC CEO Dr. Walden Rhines at the time. (Dr. Rhines had joined MGC in 1993 from TI).
For its part, CADENCE downplayed the possible antitrust issue. CADENCE also claimed that the merger “would lower software costs and benefit electronics makers because CADENCE and MGC could “share” sales and administrative staffs”. Further, then-current CADENCE CEO Mike Fister argued at the time that the software products of CADENCE and MGC were “complementary”. (Mr. Fister had joined CADENCE in 2004 from Intel).
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-- Russ Henke, EDACafe.com Contributing Editor.
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