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08/18/08 09:51 PM
Blood Sport – Securities & Security Report this article as Inappropriate to us !!!Login to Reply

Blood Sport – Securities & Security

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Sean Murphy
08/18/08 09:51 PM
It's not clear that Mentor is harmed as much as you believe new Report this article as Inappropriate to us !!!Login to Reply

Mentor closed at 10.79 on May 22, which was the last time they reported. They closed today at 10.62, so down 17 cents. It's not at all clear that animosity drove the Cadence takeover offer, as much as the belief on the part of Cadence management that they could do a better job running a combined company. There may be many things right or wrong in that calculation but wanting to "damage Mentor" strikes me as a remote possibility, especially given how damaging this set of actions may prove to Cadence.
When they announced the deal on June 18, Cadence closed at 10.84. They closed today at 7.74, so they are still down almost 29% from that level (primarily due to the reaction to their last quarter results, but clearly doubts about the merger's viability were expressed on the analyst call, and the FTC's reaction presaged rough sledding no matter what).
This combination of doubling down on their private offer by making it public, followed by a sudden removal cannot be a positive for Cadence. Mentor's concerns that regulatory issues would be problematic was certainly borne out by FTC actions to date.
We don't know what results Mentor will announce this quarter (or at least I don't) but it's not clear that accurately assessing that the merger was problematic puts Wally in hot water. When Cadence revised their revenue and earnings estimates strongly down for the rest of the year they probably limited their ability to finance the acquisition to that point that it was no longer viable.
The thing that's surprising to me is that they also announced a $500 million stock buy back (about 1/4 of their market cap on the day that they announced it) when they withdrew the merger offer. This is on top of an earlier $400M buy back this year. They have put all of their other smaller (friendly) acquisition efforts on hold, it would seem that they should go back to acquisitions of promising technologies in emerging markets as a way to ignite growth.
Sean Murphy www.skmurphy.com

Bob P
08/22/08 12:43 AM
Get Real new Report this article as Inappropriate to us !!!Login to Reply

Cunning? Vengeance? Oh please. This is business. Business is war. Plain and simple.

08/22/08 08:56 AM
Re: Get Real new [re: Bob P]Report this article as Inappropriate to us !!!Login to Reply

<p>I was pleased to see Cadence loose in it's hostile bid for Mentor simply for the reason that our industry did not need a layoff of 1,000+ professionals caused by extreme product overlap.</p>
<p>Successful mergers are complementary, not rife with overlap.</p>
<p>Now that General Fister lost this battle perhaps he is ready to be redeployed to another unit.</p>

Daniel Payne

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