Synopsys Sitting Pretty in Takeover Bid

SAN FRANCISCO -- Cadence Design Systems'(CDNS Quote) hostile takeover bid for Mentor Graphics(MENT Quote), will likely benefit their mutual chip-software rival Synopsys(SNPS Quote).

Mentor shares have risen 23% since the bid was made public June 17, closing Thursday at $15.16. Cadence offered $1.6 billion, or $16 a share in cash, a 30% premium over Mentor's June 16 closing price.

The bid comes at a critical time for Mentor contract renewals, with a sizeable number expected in the last half of the year. Uncertainty about Mentor's future may spur semiconductor makers to look to Synopsys for chip-design tools.

After rejecting the bid, Wilsonville, Ore.-based Mentor announced Monday it had hired Goldman Sachs and Merrill Lynch as advisors. But a merger, which would give Cadence 85% to 100% of the market for several software tools, may have difficulty clearing federal scrutiny. ...