Apr 25, 2002 Wilsonville, OR
Innoveda Inc. shot onto the electronic design automation scene less than two years ago through a series of acquisitions. Today, the company seemed on the brink of vanishing just as quickly. In a pair of major deals announced today, Innoveda is divesting its system-level design software unit to technology investment fund Divestiture Growth Capital, and merging the remaining PCB business unit with Mentor Graphics Corp.
The SLD business unit will begin operations immediately under the name Summit Design Inc., Innoveda said in a press release. Larry Gerhard was named CEO of the new company, headquartered in Westlinn, OR. Guy Moshe, former vice president and general manager of the SLD business unit at Innoveda, was also named an officer in Summit Design. Financial terms were not disclosed.
�System-level design is an emerging market with new methodologies that require intense focus and commitment of resources, particularly in sales and engineering,� said Innoveda chairman and CEO William J. Herman. �It was in the best interest of our respective customers to complete this transaction ... .�
�We are excited about the opportunities ahead of us and we are moving forward immediately to execute against our business plan,� said Gerhard. �Because the products, infrastructure and resources already are in place, we can provide a seamless transition for customers and begin engaging new prospects.�
Gerhard is a former executive of Enterprise Communications & Computing, Inc., Ventura Software, and Decision Data Inc. and Raytheon Data Systems, at which he was vice president of engineering.
Mentor Merger
Meanwhile, Mentor Graphics (Wilsonville, OR) signed a definitive merger agreement 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 agreement, expected to close by April 30.
Under the terms, Indiana Merger Corp., 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 agreement provides for the tender offer, which is expected to close April 30, 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, the companies said. �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.
�Innoveda's technology, products and roadmap provide additional components for the realization of our product strategy to address these challenges. Mentor is committed to the systems design industry, and intends to continue to support Innoveda�s customers.�
Almost lost amid the flurry of transactions, Innoveda also reported a loss for the first quarter ended March 30. Innoveda posted an operating loss, before amortization, of $2.2 million on revenue of $15.7 million. The net loss for the quarter was $3.1 million.
It's the second major deal for Mentor in two weeks. On March 13, Mentor and IKOS Systems Inc. announced a definitive agreement under which Mentor will acquire all outstanding shares of IKOS for $11 in cash per share of IKOS common stock. (The transaction, worth an estimated $110 million, came a day after IKOS called off a merger with Synopsys Inc.)
In January Innoveda licensed its CAM tool line to DownStream Technologies, a startup company led by two former Innoveda executives.
