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Synopsys Agrees to Acquire IKOS Systems
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--July 2, 2001--Synopsys,
Inc. (NASDAQ:SNPS) and IKOS Systems, Inc. (NASDAQ:IKOS - ) today
announced that they have signed a merger agreement providing for the
acquisition by Synopsys of all outstanding shares of IKOS. The merger
is expected to benefit design teams faced with the challenges of
verifying multi-million gate system-on-chip (SoC) designs by providing
a full suite of functional verification products integrated with IKOS'
high performance hardware-assisted platforms. The purchase price per
share, which will range between $6 and $20, will be determined by a
formula based on IKOS' financial performance in the 12-month period
ending June 2002. Completion of the merger is targeted for August 2002
in order to ensure Synopsys' full compliance with the terms of a
five-year non-competition agreement arising from the June 1997 sale of
its prior emulation technology. Upon closing of the transaction, each
shareholder of IKOS will receive Synopsys common stock.
``The functional verification problem faced by SoC designers today
is growing exponentially,'' stated Aart de Geus, chairman and CEO of
Synopsys. ``Our customers are demanding integrated solutions to address
verification through every step of the design flow, and they require
best-in-class technology in each product area. The combination of
Synopsys and IKOS solutions will provide the deepest and broadest
portfolio of integrated verification products in the industry.''
With ever-increasing verification requirements, designers must
employ both faster tools and smarter verification strategies to meet
their goals. Synopsys provides the fastest RTL simulation tools in the
market, which are complemented by leading testbench automation, formal
verification and coverage analysis tools to provide the fastest and
smartest software-based solution in the industry. Adding IKOS'
technology-leading hardware-assisted verification platforms, which
increase verification speed by orders of magnitude, will provide
designers with the most complete solution for verifying very complex
systems-on-chip.
``IKOS has long held a vision of providing a broader offering of
verification solutions and of seeing our hardware-assisted platforms
become mainstream tools for the verification of large, complex
designs. We see great opportunities and benefits for our customers
arising from the combination of Synopsys' best-in-class software
solutions with IKOS' leading-edge hardware-assisted platforms,'' stated
Ramon Nunez, president and CEO of IKOS. ``We have been a member of
Synopsys' in-Sync® partnership program for many years. We shall
continue this historical type of activity during the next year and we
are excited about working together to create further state-of-the-art
solutions for SoC functional verification after the merger is
complete.''
Structure of the Transaction
The target for closing the transaction is August 2002. This date
ensures that Synopsys will fully honor its emulation non-competition
agreement with Quickturn Design Systems that expires in June 2002. Due
to the extended pre-closing period, the companies have agreed that the
final per-share purchase price will be determined by IKOS' revenue,
change in backlog, and profit before tax for the 12-month measurement
period ending June 30, 2002, and ranges from $6 to $20.
After the close of the measurement period, IKOS' auditors, subject
to review by Synopsys and its auditors, will calculate revenue plus
change in backlog and profit before tax (PBT), as defined in the
merger agreement, and the price per share will be calculated using
both metrics. The final price per share will be the lower of the two,
except where the price determined by revenue alone (i.e., without the
change in backlog) is higher than the price determined by PBT, in
which case the final price will be determined by revenue plus change
in backlog, if it produces a higher price. The following table
summarizes the price per share at different levels of revenue plus the
change in backlog, and at different levels of profit before tax.
-0-
------------------------- ---------------------- ---------------------
Price per Share Revenue Plus Change Profit (loss)
in Backlog(1) Before
Tax(1)
------------------------- ---------------------- ---------------------
------------------------- ---------------------- ---------------------
$20.00 more than more than
or or
equal to $100 million equal to 18 million
------------------------- ---------------------- ---------------------
------------------------- ---------------------- ---------------------
$18.00 $90 million $14 million
------------------------- ---------------------- ---------------------
------------------------- ---------------------- ---------------------
$15.00 $80 million $8 million
------------------------- ---------------------- ---------------------
------------------------- ---------------------- ---------------------
$12.00 $70 million $0
------------------------- ---------------------- ---------------------
------------------------- ---------------------- ---------------------
$9.00 $60 million ($5 million)
------------------------- ---------------------- ---------------------
------------------------- ---------------------- ---------------------
$6.00 $50 million ($10 million)
------------------------- ---------------------- ---------------------
(1) If revenue plus the change in backlog or PBT falls between any of
the points in the table, the price will be calculated using linear
interpolation.
A full explanation of the pricing structure of the merger will be
filed in a Registration Statement on Form S-4 with the Securities and
Exchange Commission, and qualifies the preceding table.
Upon closing of the merger, IKOS stockholders will receive shares
of Synopsys common stock, with the ratio determined by dividing the
purchase price per share by the average closing price of Synopsys
stock during the ten trading-day period ending on the fifth trading
day prior to the closing date. IKOS stock options will be assumed by
Synopsys at the same exchange ratio. The transaction is expected to be
tax free to holders of IKOS stock. The merger will be accounted for as
a purchase transaction.
The merger is subject to certain conditions, including IKOS
achieving revenue of at least $50 million and losses before tax not
exceeding $10 million during the measurement period, expiration or
termination of the Synopsys emulation non-compete provision, IKOS
stockholder approval, retention of certain employees, compliance with
regulatory requirements and customary closing conditions.
Conference Call Open to Investors
Synopsys and IKOS will hold a conference call for financial
analysts and investors today at 2:30 p.m., Pacific Time. The
conference call is accessible by calling 1-877-209-9921 (or
+1-612-332-1213 for international callers). A live webcast of the call
will also be available from http://www.StreetFusion.com or through a
link on Synopsys' web site at
http://www.synopsys.com/corporate/invest/invest.html. A recording of
the call will be available beginning at 6:00 p.m. today and ending at
11:45 p.m. on July 13, 2001, and is accessible by calling
1-800-475-6701 (or +1-320-365-3844 for international callers), access
code 593964. A webcast replay will also be available from
http://www.StreetFusion.com or through a link on Synopsys' web site at
http://www.synopsys.com/corporate/invest/invest.html from
approximately 4:30 p.m. today and ending at 5:00 p.m. on July 13,
2001.
Forward Looking Statements
The second, third and fourth paragraphs of this press release
contain forward-looking statements under the safe harbor provisions of
Section 21E of the Securities Exchange Act of 1934. These statements
are based on Synopsys' and IKOS' current expectations and beliefs.
Actual results could differ materially from the results implied by
these statements. Factors that may cause or contribute to such
differences include the successful closing of the acquisition; changes
in both companies' businesses during the period between now and the
target closing date; litigation relating to the transaction or the
businesses; the successful integration of IKOS into Synopsys' business
subsequent to the closing of the acquisition; timely development,
production and acceptance of products and services contemplated by the
merged company after completion of the proposed acquisition;
increasing competition in the market for verification hardware or
software; the ability to retain key management and technical
personnel; adverse reactions to the proposed transaction by customers,
suppliers and strategic partners and other risks described in
Synopsys' report on Form 10-Q filed with the Securities and Exchange
Commission (SEC) on June 15, 2001 (pp. 20-23), IKOS' report on Form
10-Q filed with the SEC on May 14, 2001 (pp. 10-14) and such other
risks as may be detailed from time to time in each company's periodic
reports filed with the SEC.
About IKOS
IKOS Systems, Inc. (NASDAQ:IKOS) is a technology leader in
high-performance design verification solutions including hardware and
software simulation for language-based design, logic emulation for
system integration and compatibility verification, and verification
services. The company's mission is to develop and deliver high
performance solutions that enable its customers to verify the
functional correctness of their complex electronic system designs.
IKOS has direct sales operations in North America, UK, France,
Germany, The Netherlands, Japan and India, and a distribution network
throughout Asia-Pacific and Israel. The corporate headquarters is
located at 79 Great Oaks Blvd., San Jose, Calif., 95119, 408/284-0400.
For more information, visit http://www.ikos.com.
About Synopsys
Synopsys, Inc. (NASDAQ:SNPS), headquartered in Mountain View,
California, creates leading electronic design automation (EDA) tools
for the global electronics market. The company delivers advanced
design technologies and solutions to developers of complex integrated
circuits, electronic systems, and systems on a chip. Synopsys also
provides consulting and support services to simplify the overall IC
design process and accelerate time to market for its customers. Visit
Synopsys at http://www.synopsys.com.
Note to Editors: Synopsys and in-Sync are registered trademarks
and VCS is a trademark of Synopsys, Inc. IKOS is a registered
trademark of IKOS Systems, Inc. All other trademarks or registered
trademarks mentioned in this release are the intellectual property of
their respective owners.
Additional Information: In connection with the proposed merger,
Synopsys, Inc. plans to file a Registration Statement on Form S-4
(including a Proxy Statement/Prospectus) and IKOS plans to file a
Proxy Statement, each containing information about the proposed
merger, with the Securities and Exchange Commission (``SEC'').
Thereafter, IKOS will mail the Proxy Statement/ Prospectus to IKOS
stockholders. Investors and security holders are urged to read the
Registration Statement and the Proxy Statement/Prospectus carefully
when each document becomes available. The Registration Statement and
the Proxy Statement/Prospectus will contain important information
about Synopsys, IKOS, the proposed merger and related matters.
Investors and security holders will be able to obtain free copies of
these documents through the website maintained by the SEC at
http://www.sec.gov. Free copies of the Registration Statement, Proxy
Statement/Prospectus and Synopsys' other filings may also be obtained
by accessing Synopsys' website at http://www.synopsys.com or by
directing a request by mail or telephone to Synopsys, Inc., 700 East
Middlefield Rd., Mountain View, California 94043, (650) 584-5000. Free
copies of the Proxy Statement/Prospectus and IKOS' other filings may
also be obtained by accessing IKOS' website at http://www.ikos.com or
by directing a request by mail or telephone to IKOS Systems, Inc., 79
Great Oaks Blvd., San Jose, California 95119, (408) 284-0400.
You may read and copy any reports, statements and other
information filed by Synopsys and IKOS at the SEC public reference
rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the
Commission's other public reference rooms in New York, New York and
Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for
further information on public reference rooms. Synopsys' and IKOS'
filings with the Commission are also available to the public from
commercial document-retrieval services and the web site maintained by
the Commission at http://www.sec.gov.
Synopsys and its directors and executive officers may be deemed to
be participants in the solicitation of proxies from IKOS stockholders
by IKOS and its Board of Directors in favor of the adoption and
approval of the merger agreement and approval of the merger.
IKOS and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from IKOS stockholders in
favor of the adoption and approval of the merger agreement and
approval of the merger. Investors and securities holders may obtain
additional information regarding the interests of the participants
from IKOS' filings with the SEC under Rule 14a-12 of the Exchange Act
of 1934, as amended.
Contact:
Synopsys, Inc.
Craig Cochran, 650/584-4230 (Editorial)
craig@synopsys.com
Steve Shevick, 650/584-4880 (IR)
shevick@synopsys.com
or
IKOS Systems, Inc.
Linda Prowse Fosler, 408/61-9667 (Editorial)
linda@ikos.com
or
Demer IR (for IKOS Systems)
Peter Denardo, 925/938-2678, ext. 223 (IR)
pdenardo@demer-ir.com
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