Oct 16 Mentor Graphics Corp, a company
that makes software for designing semiconductors, is working
with Bank of America Corp to explore strategic
alternatives, including a potential sale, according to people
familiar with the matter.
Mentor has been under pressure since activist hedge fund
Elliott Management Corp reported an 8.1 percent stake in the
company last month and said its shares were deeply undervalued.
As part of the sale process, Mentor may reach out to major
industrial companies with software operations, such as Siemens
AG and Dassault Systemes SA, as well as
private equity firms, to gauge potential acquisition interest,
one of the people said.
There is no certainty that a sale of Mentor will occur, the
The sources asked not to be identified because the
deliberations are confidential. Mentor, Siemens and Dassault did
not immediately respond to requests for comment, while Elliott
and Bank of America declined to comment.
Mentor Graphics, based in Wilsonville, Oregon, and run by
Chief Executive Wally Rhines, is no stranger to activist
investors or takeover offers. Billionaire activist Carl Icahn
won a proxy fight in 2011 that secured him three board seats,
although he exited his investment in the company in April after
Mentor also fended off a hostile takeover by rival Cadence
Design Systems Inc in 2008.
The electronic design automation company, which has a market
capitalization of $3 billion, sells software tools to
semiconductor firms that use it to design and test their chips
before manufacturing them. Its peers include Cadence and
Mentor's shares have recovered after a disappointing
earnings outlook last November. As of Friday's close, shares
were up about 12 percent since Elliott took a stake last month.
Elliott said last month there were numerous operational
opportunities in Mentor, "including enhancing operational
efficiency and revenue quality, as well as strategic
opportunities." It said it had initiated a dialogue with the
company's management and board of directors regarding those
A sale of Mentor would follow successful activist campaigns
by Elliott such as Qlik Technologies, Riverbed, Informatica and
Compuware. All these companies were sold to private equity firms
after the hedge fund invested.
SteetInsider.com reported on Oct. 13, citing a source it did
not identify, that Mentor had hired a financial adviser to
review strategic alternatives, including a possible sale.
(Reporting by Liana B. Baker in San Francisco and Greg
Roumeliotis in New York)