Mentor Graphics board rejects Icahn's takeover bid

AP News
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Posted: Mar 28, 2011 9:31 AM
Mentor Graphics board rejects Icahn's takeover bid

The board of software maker Mentor Graphics Corp. has rejected an offer from investor Carl Icahn to buy the company's remaining shares for $17 each.

The Wilsonville, Ore., company said in a statement Monday that the offer undervalues the company and is not in the shareholders' best interest. Icahn made the offer in February. It valued the company at about $1.9 billion.

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

The board unanimously decided to continue with Mentor Graphics' strategic plan, which it said offers the best value to shareholders.

It also determined that an Icahn proposal to put Mentor Graphics up for sale "entails significant commercial and regulatory risk," the statement said.

Messages were left Monday for Icahn at his company's New York headquarters.

Walden Rhines, Mentor Graphics' chairman and CEO, said in the statement that the past fiscal year was a record one for the company, and he expects positive momentum to continue in the current fiscal year and beyond. The company's share price, he said, has grown more than 70 percent in the past year and more than 200 percent in the past two years, outperforming peer companies and the market.

"Our Board believes that the continued execution of our strategic plan offers the greatest value to Mentor shareholders and that it will drive further growth and continued success," Rhines said in the statement.

The board also said it "remains open to any opportunity to enhance shareholder value," according to the statement.

Icahn and his affiliates already own 15 percent of Mentor Graphics shares. He met with the company in February to discuss putting itself up for sale, according to regulatory filings. 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.

Mentor Graphics shares were up 38 cents, or 2.5 percent, to $15.50 in premarket trading Monday.