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Cadence Design Systems Inc. (NASDAQ: CDNS) is the largest player in developing platforms for building integrated circuits. The company generates about $1.6 billion in revenues and has 5,100 employees.
Now, Cadence wants to get even bigger. Today, the company announced an unsolicited $1.6 billion bid for Mentor Graphics Corp. (NASDAQ: MENT). The offer is $16 per share.
Mentor is a big player in testing semiconductors, which should be a nice compliment to Cadence. And over the past couple months, Cadence has been trying to court Mentor.
But all advances were rejected. So why not go hostile?
While there are revenue synergies, it looks like the big advantage to the acquisition may be the cost savings. This is especially important as the global revenues of the semiconductor industry trail off.
But for a company like Cadence – which has a market cap of $2.8 billion – the acquisition of Mentor is a big deal and does carry some risk.
In today's trading, the shares of Cadence are down 6% to $10.89.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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