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Making Mentor Out As the Bad Guy?

In the last few days, I’ve run across several stories – one in the local paper and others in blogs – that seem to suggest that Mentor deserves no sympathy in its attempt to fend off the hostile takeover by Cadence since Mentor is itself in a hostile takeover bid for a smaller company called Flometrics. [BTW: Daniel Payne's "EDA Thoughts" blog first raised the issue of Mentor's attempted acquisition of Flowmetrics back in early May.]

This seems like an overly simplistic argument. Let’s face it: Like it or not, hostile takeovers are a way of life in a capitalistic market. They are just another business tool. Instead of focusing on such emotional issues as which company has the nicer CEO or the more engineering-friendly environment, serious journalists and bloggers should try to answer such questions as:

  • Why is a hostile takeover technique being used? Have other options been exhausted?
  • Why is the takeover being initiated now instead of 6 months ago?
  • Is the goal of the takeover to secure market share or intellectual property that clearly fits into the business strategy of the aggressor company?
  • Or is the takeover being used to hide diminished earnings or other financial problems, i.e., is the takeover a diversionary tactic to divert attention from a lack of innovation, decreased market share or price share of the aggressor?

Just because a company engages in hostile takeovers doesn’t make it a bad company… or a good one. What makes the aggressor a bad or good company is the reasons behind the takeover bid as well as the past history of similar takeovers.

2 Responses to “Making Mentor Out As the Bad Guy?”

  1. Lou Covey Says:

    I tend to agree. People want to anthropomorphize corporations and infuse them with their own personal ethics, but in the end, a corporation is nothing but a big committee filled with people with like sel-interests.

    There is no personal animosity in the Cadence/Mentor dust-up. Consolidation hast to be done in the industry and each company has to review the pluses and minuses of each combination. Looking at which technologies complement and conflict is only one of the aspects. Another is stock price, another is installed base. Another is manpower and sales forces. And lets not forget that the overall intent of any consolidation is to create a efficient synergy, which is a fancy way of getting rid of deadwood in organizations.

    This takeover may not happen, but a merger or buyout is going to happen in EDA very soon. We just have to decide to get used to it now or later.

    And it is nothing personal.

  2. John Blyler Says:

    Well put, Lou. Consolidations in the EDA industry will occur more rapidly than in the recent past. How this trend will affect startups and innovation is a question for another time.

    The real point I was trying to make is that the reason – the “real” reason, not the spin – for a hostile takeover is the only thing worth discussing. Is the aggressor company pursing a buyout strategy to improve it’s technical standing or market position? Or is the buyout bing used to divert attention from bad technical/business decisions of the past? Or poor market earnings. This is the angle that very few press-bloggers have examined. But it is the most crucial question to be examined. IHMO.

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