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Why Didn’t Cadence Hold a Press Briefing on Acquisition?

Bet you think I’m going to complain about being left out? Hardly….

Cadence held a company-wide meeting last Friday (6/13) to inform its employees about Cadence’s latest attempt to acquire Mentor (offer at $16/share). Interestingly, none of the chief editors in the few remaining EDA publications received notification prior to today’s (6/17) wired release. The semiconductor press did receive a phone brief, as did the business folks. In fact, rumor has it that Credit Suisse and RBC Capital Markets have already favorably reviewed the acquisition. Not that the credit market leaders are known for making sound decisions.

I’m not surprised that the EDA press wasn’t informed about Cadence’s proposed acquisition. It may be that Cadence is trying to distance itself from the EDA community as a whole. Their lack of presence last week at DAC certainly supports this idea. Further, Cadence’s chief competitors are also moving beyond the EDA community. Both Synopsys and Mentor have been realigning their long-term goals with the broader semiconductor industry for some time, with Aart now on the board of Applied Materials and Wally leading the GSA. Still, it’s instructive to note how each of the major companies – Cadence, Synopsys and Mentor – decides how best to communicate (or not communicate) their movement beyond the world of only EDA tools. Very telling….

8 Responses to “Why Didn’t Cadence Hold a Press Briefing on Acquisition?”

  1. Chris Edwards Says:

    Nothing here. It’s quite rare for a company to pre-brief on a hostile takeover attempt (which is what this is effectively). However, Cadence didn’t exactly go out of its way to inform trade press about the analyst call at 10am Eastern.

  2. John Blyler Says:

    Hi Chris. I’m told that the editor at Reed’s Semiconductor Intern magazine did receive a pre-release phone call, though I haven’t confirmed the info (need to talk with Ron Wilson). And it’s not surprising that the investment community knew in advance. Still, I am usually alerted to analyst calls – as you note – by the major players. So the oversight seems intentional, tho Cadence has recently laid-off many of its PR and marketing folks.

    Not a big deal in the grand scheme of things, but may portent things to come in the EDA community.

    BTW: You have a great blog. Keep it up!

  3. Lou Covey Says:

    Not a big surprise. There are no marketing communications or PR folks left at Cadence, and the few that are left at Mentor were told to make no comment.

    If this goes through, then the Mentor support of industry trade shows goes away, leaving only Synopsys and Magma as the financial anchors. Since Synopsys only continues to attend because Mentor is there, they will bow out and Magma will follow. Since everyone else in the industry follows whatever Cadence, Mentor, Synopsys and Magma do, you will be able to hold DAC in a hotel ball room.

    Cadence will be sold in a private equity deal and then absorbed by a large company (Peggy’s TSMC prophesy may have been right) Fister will get a big payday and fly off to his private home in Idaho. 80 percent of the private EDA companies will be out of business in 10 years and Synopsys and Magma will be bought by IDMs and large fabless companies.

    This might not be a bad thing for the press. As semi’s gather design technology and expertise, they can use that as a bolster for the stock price and gain systems developers as customers. Those semi’s will see marketing as an important tool and will start advertising again. Publications that have made the switch to multiple outlets for information will gain more and more revenue. Tech journalism will be saved.

    Forever the optimist, aren’t I?

  4. Lou Covey Says:

    Here’s an idea that might make this good for everyone. The rumors that Fister is on the way out have been flying all over the valley. So let’s say Cadence is successful. Wally replaces Fister as the head of the new company, the board gets expanded to include Mentor’s more forward thinking directors, the company changes the name to Cadence Graphics, and now you have a real number one player in the market with a leader who understands the industry and a bunch of EDA deadwood heads out the door.

    Nah. Makes too much sense. Would never happen.

  5. John Blyler Says:

    OK, Mr. Sunshine :) Maybe this is Fister’s last big play for his EDA legacy… or maybe not. But I doubt that TSMC would want to acquire Cadence. CAD company is most likely acquisition for Cadence, IMHO. Time will tell.

    Regardless, I’d like to save some of tech journalism.

  6. Chris Edwards Says:

    Thanks John.

    I can’t see why TSMC would want to burden itself with a design-tools company, particularly anyone with a lot of frond-end tools. I could see the argument if you were to uncouple DFM from the rest. But even then, it’s like going back to the old VLSI/LSI model pre-Compass.

    A Catia/Matrix One deal is possible. That favours an acquisition of Mentor alone, not Cadentor as all the benefit between CAD and EDA lies in board and system design: chip design is an esoteric sideshow for them. But I’m not sure anyone is in a hurry to revisit the Intergraph situation. I guess as things such as plastic electronics come through, there will be a greater need for mixed mechanical/electronics design. But maybe a CAD company could add all that for a lot less money by buying Altium.

  7. John Blyler Says:

    Hi Chris. Decoupling DFM makes sense, but TSMC already has it’s own DFM tools. Agree that the EDA industry seems to be cycling back to the earlier VLSI/LSI model. Maybe its time.

    You bring up an important point with Intergraph. Need to think about that one a bit. My suggest for a CAD buyout was due to the recent expansion of certain EDA companies into the chip packaging space (Apache buying Optimal, Cadence with SiP, etc). Chip packaging concerns are just stone’s through away from CAD, IMHO.

  8. JB's Circuit » What does Carl Icahn really want from Mentor? Says:

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