Icahn offers $17 a share for Mentor Graphics

AP News
Posted: Feb 22, 2011 6:43 PM
Icahn offers $17 a share for Mentor Graphics

Activist investor Carl Icahn has offered to buy the remaining shares of software maker Mentor Graphics Corp. for $17 per share in cash, valuing the company at about $1.9 billion, according to a regulatory filing on Tuesday.

Mentor makes software and systems used to test electronics components used in aerospace and military-grade products, automobiles and low-power electronics.

The offer is a 17 percent premium over the Wilsonville, Ore., company's closing price last Friday. Its shares rose 95 cents, or 6.5 percent, to close at $15.47 Tuesday after rising to a 52-week high of $16.56 earlier in the session.

Mentor said in a statement that it will review the proposal and said Icahn and his affiliates already own a 15 percent stake in the company. In the meantime, it advised its shareholders not to take any action until the review is complete.

The billionaire investor's offer leaves room for Mentor Graphics to receive even higher bids without paying him a break-up fee, according to the filing.

"We believe that our fellow shareholders should have the opportunity to accept our offer or a higher one, if one emerges as we think it will," he wrote in a note dated Tuesday to the company's board of directors. The company included the letter in its filing with the Securities and Exchange Commission.

Icahn met with Mentor Graphics last week to discuss putting the company up for sale, according to an earlier filing. At the time, Icahn argued that a sale would greatly enhance shareholder value and that several buyers would be interested in paying a "substantial" premium for it.

Icahn's offer assumes that Mentor Graphics will waive a shareholder rights plan, or so-called "poison pill," to protect the company from unsolicited takeover bids.

The disclosure of the Icahn bid for Mentor comes only four days after his $665 million offer for the Texas power company Dynegy Inc. failed to get sufficient support from Dynegy shareholders and was terminated.