For the most part, the Cadence Design Systems (NASDAQ: CDNS) unsolicited offer for Mentor Graphics (NASDAQ: MENT) was a smart move (both companies are leaders in semiconductor design software). This transaction would be a critical part of consolidation in the industry.

However, on Friday, Cadence decided to drop its $1.6 billion bid. As a result, the shares of Mentor plunged 25%.

What happened here? Well, according to Cadence, it looks like the board of Mentor didn't want to open its books (although, Mentor disputes this). Another issue is antitrust. Oh, and with the credit crunch, it's still pretty tough getting financing.

Perhaps the big problem is the slowing economy, which is putting pressure on the semiconductor industry. After all, Cadence posted weak Q2 results, and the outlook looks dismal.

Whatever the reasons, Wall Street likes the result. On the news, Cadence's share increased 6.7%.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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?

My recent Investing in Oregon post took a look at some companies that the Motley Fool had featured in its investigation of investment opportunities in the Beaver State, including Precision Castparts Corp. (NYSE: PCP), StanCorp Financial Group Inc. (NYSE: SFG), FLIR Systems Inc. (NASDAQ: FLIR), and Columbia Sportswear Co. (NASDAQ: COLM).

But the Motley Fool article also mentioned that one of the most prominent business influences in Oregon wasn't even headquartered in the state: semiconductor giant Intel Corp. (NASDAQ: INTC) from Santa Clara, California. It also included mention of four Oregon-based businesses that provided support for Intel: Tektronix Inc. (NYSE: TEK), Mentor Graphics Corp. (NASDAQ: MENT), Triquint Semiconductor Inc. (NASDAQ: TQNT), and Electro Scientific Industries Inc. (NASDAQ: ESIO). One could imagine that Intel's impressive earnings report this week should have been good news for these supporting companies.

Beaverton-based Tektronix, widely known as Tek, is one of the leading makers of test and measurement equipment, such as digital multimeters, logic analyzers, and curve tracers, and oscilloscopes. Tek will win its seventh technical Emmy this year. Tek beat Wall Street expectations in its previous three quarters, reporting earnings per share of 40 cents for its first quarter FY2008. But the consensus of analysts surveyed by Thomson Financial was to hold shares of Tek. The share price reached a 52-week high of $37.95 on Monday when it was announced that Danaher Corp. (NYSE: DHR) will acquire Tek. Tool and equipment maker Danaher just announced record third quarter results.

The design of electronic hardware components has become so intricate a process that engineers use digital simulation products to avoid long verification cycles and the expense of manufacturing multiple prototypes. A leading provider of design automation software and systems is headquartered in Wilsonville, Oregon.

Mentor Graphics (NASDAQ: MENT) provides electronic design automation software and systems that engineers use to design, analyze, simulate, model, implement and verify the components of electronic systems. Firms use Mentor's software to produce such products as computers, routers, and cellular handsets. The company also provides consulting and support services. Mentor has business partnerships with Hewlett-Packard (NYSE: HPQ) and Sun Microsystems (NASDAQ: JAVA).

The firm pleased investors last week, when it reported Q2 EPS of 15 cents and revenues of $205.7 million. Analysts had been expecting 8 cents and $200.2 million. The CEO noted strength across all of the company's system related product lines. Management also guided FY08 EPS to $1.02 (98 cent consensus), FY08 revenues to about $860 million ($856.04M consensus), FY09 EPS to $1.22 ($1.15 consensus) and FY09 revenues to about $920 million ($912.44M consensus).