Cadence to acquire Quickturn
The firm moves to buy Quickturn in a $253 million stock deal, apparently topping a hostile bid from Mentor Graphics.
Mentor Graphics launched a hostile bid to buy Quickturn in August for $12.125 per share in cash, or $216 million. Quickturn makes emulation systems and engineering services for the verification of circuits and electronic systems.
Cadence will acquire Quickturn in a tax-free, stock-for-stock transaction. Upon the closing of the merger, each Quickturn shareholder will receive Cadence common stock with a value of $14 per share.
Cadence, a provider of comprehensive services and software for electronics companies, said the merger fits its growth objective, and it is looking forward to "earnings potential that [the merger] will deliver."
In September, Cadence agreed to buy closely held Ambit Design Systems for $260 million in cash, adding to its own system-on-a-chip technology. In August, the company moved to acquire Lucent Technologies' Bell Labs Design Automation Group.
Shares of Cadence slipped 2.71 percent to 29.19 in early trading. The stock has traded as high as 39 and as low as 19.13 in the past 52 weeks. Quickturn stock jumped on the news of the acquisition, rising 13.85 percent to 13.88, and has hit a high of 15.75 and a low of 6 during the past 52 weeks.
Cadence said the merger would be accounted for as a pooling of interests and that it expects the transaction to be accretive to earnings in 1999. As a result of the merger, Quickturn will become a wholly owned subsidiary of Cadence.
Quickturn also has issued Cadence an option to purchase 19.9 percent of the outstanding common stock of Quickturn for $14 per share, which will become exercisable under certain conditions.
The merger is subject to certain conditions, including compliance with applicable regulatory requirements and approval by Quickturn's shareholders. It is expected to close in the first quarter of 1999.
Reuters contributed to this report.