Mentor Graphics Offers to Acquire IKOS Systems, Inc.
Offers $11.00 in Cash per Share for All Outstanding IKOS Shares
WILSONVILLE, Ore.--(BUSINESS WIRE)--Dec. 7, 2001--The following is
a statement issued by the Board of Directors of Mentor Graphics
Corporation.
Mentor Graphics Corporation (Nasdaq: MENT - news) today announced that it
is offering to acquire IKOS Systems, Inc. (Nasdaq: IKOS - news) for $11.00 in
cash per share of IKOS common stock. The offer represents a premium of
37% over the Nasdaq closing price of IKOS stock on December 6, 2001
and a premium of 49.5% over IKOS' closing price on June 29, 2001, the
last trading day before IKOS announced its proposed acquisition by
Synopsys Inc. (Nasdaq: SNPS - news). Furthermore, the offer represents a
premium of 87% over the average closing price of IKOS stock for the
thirty trading days ended December 6, 2001.
"Our offer makes strategic sense for both companies," said Walden
C. Rhines, Chairman and Chief Executive Officer of Mentor Graphics.
"Our acquisition of IKOS will add to Mentor's existing products a
proven and complementary emulation product line. IKOS products provide
a mid-range verification solution to customers desiring a lower price
point solution. Acquiring IKOS will also provide Mentor with North
American sales and service capabilities in the emulation arena that we
will leverage across our entire product line.
"For IKOS, our all-cash offer is clearly superior to the present
agreement with Synopsys," continued Dr. Rhines. "The Synopsys proposal
is subject to onerous closing conditions that IKOS may well not be
able to satisfy in the current environment. It is also subject to an
uncertain price payable no earlier than August 2002. Our offer is for
cash at a price significantly higher than the present trading price
and can be consummated quickly, more than seven months earlier than
the Synopsys proposal."
Mentor's offer is not subject to any financing condition, and the
offer is scheduled to expire at 12:00 midnight, New York City time, on
Tuesday, January 8, 2002, unless the offer is extended.
Mentor beneficially owns 841,600 shares or approximately 9.1% of
IKOS' outstanding common stock. The Information Agent for the offer is
Mackenzie Partners, Inc.
The full text of the letter submitted to the Board of Directors of
IKOS is printed below.
December 6, 2001
Board of Directors of IKOS Systems, Inc.
IKOS Systems, Inc.
79 Great Oaks Boulevard
San Jose, California 95119
c/o Ramon A. Nunez, President and Chief Executive Officer
c/o Gerald S. Casilli, Chairman of the Board of Directors
Offer to Acquire IKOS Systems, Inc.
Gentlemen:
Mentor Graphics Corporation ("Mentor Graphics") offers to acquire
IKOS Systems, Inc. ("IKOS") at a price of $11.00 per share of IKOS
common stock payable in cash.
Summary of Offer. Our offer, which is based on publicly-available
information and is not subject to any financing condition, represents
a premium of 37% over the Nasdaq closing price of IKOS' stock on
December 6, 2001, and 49.5% over the Nasdaq closing price of IKOS'
stock on June 29, 2001, the trading day before the transaction with
Synopsys Inc. was announced. Furthermore, our offer represents a
premium of 87% over the average Nasdaq closing price of IKOS' stock
for the thirty trading days ended December 6, 2001. Our all-cash offer
will enable your stockholders to receive the entire premium
immediately. This will eliminate the significant risk to your
stockholders with respect to the future performance of your business,
the EDA industry, the overall stock market or the economy generally
that exists under your proposed transaction with Synopsys.
Our offer is not subject to the onerous closing conditions
contained in your agreement with Synopsys -- conditions that IKOS may
well not be able to satisfy in the current environment. For example,
at the revenue/backlog and profit rates of your quarter ended
September 30, 2001, it is questionable whether Synopsys would even be
required to close the transaction, much less pay your stockholders
more than the $6.00 per share minimum in August 2002. In contrast, our
offer is for $11.00 per share in cash seven months earlier in January
2002.
The acquisition consists of a first-step cash tender offer for all
outstanding shares of IKOS common stock, followed by a second-step
merger in which IKOS' remaining stockholders would receive the same
cash price per share paid in the tender offer.
Background. As you are no doubt aware, Mentor Graphics approached
IKOS in April 2001 to indicate its interest in making an offer for
Mentor Graphics to acquire IKOS. On several subsequent occasions,
Mentor Graphics indicated its continued interest in acquiring IKOS to
IKOS and IKOS' financial advisor.
We were therefore disappointed that you chose not to contact us
prior to your acceptance of the Synopsys agreement - an agreement
which we believe your stockholders will find inadequate. We believe
that both your stockholders and the investment community will welcome
our superior all-cash offer - an offer which can be consummated very
quickly. We further believe that the trading price of IKOS' stock
since the announcement of your agreement with Synopsys demonstrates
that your stockholders have serious reservations about a transaction
with Synopsys.
Superiority of Mentor Graphics Offer. The superiority of the
Mentor Graphics offer is easily demonstrated:
-0-
Issue Synopsys Proposal Mentor Graphics Offer
Certainty
of
Closing Highly conditional. There is no Minimal standard
conditions for an
certainty this transaction will ever all-cash tender offer
close, exposing IKOS stockholders to with no financing
risk of termination for more than a condition; no need to
year; Synopsys effectively has an wait until late
"option" to acquire IKOS. Based on summer 2002 to find
an annualization of IKOS' most out whether the
recent quarterly results, it is transaction is
questionable whether Synopsys will actually completed.
have any obligation to close the
transaction.
Price Unknown at this time, subject to a $11.00 per share (in
complicated formula; based on an cash). Our price is
annualization of IKOS' most recent not subject to IKOS'
quarterly results, IKOS stockholders financial performance
may not even receive $6.00 per and represents a
share. premium of 49.5% over
the Nasdaq closing
price on June 29,
2001, 37% over the
Nasdaq closing price
on December 6, 2001,
and 87% over the
average Nasdaq
closing price of
IKOS' stock for the
thirty trading days
ended December 6,
2001.
Payment of
Consid-
eration In Synopsys stock in August 2002; In cash promptly
subject to subsequent risk of following
Synopsys stock performance. consummation of our
tender offer; no risk
as to stock
performance and no
financing condition.
Closing
Date Estimated to occur in August 2002, As early as 20
over 12 months from announcement and business days after
at least eight months from now. In launch of tender
the Synopsys transaction, IKOS is in offer; could be by
an uncertain state of limbo for over early-January 2002,
a year from the date of announcement. seven months before
the earliest
anticipated closing
date for the Synopsys
transaction.
Action by IKOS Board. Our offer is vastly superior to the
agreement with Synopsys. We are prepared to move expeditiously to
consummate the offer. In accordance with your fiduciary duties to
IKOS' stockholders and pursuant to your existing rights under Section
5.2 of your agreement with Synopsys, we expect you to afford us prompt
access to information concerning IKOS so that we can operate on a
level playing field with Synopsys. Following satisfactory completion
of confirmatory due diligence, we would expect to enter into
definitive documentation for the transaction and consummate the
transaction as soon as possible thereafter.
We would strongly prefer to work with you toward the consummation
of a negotiated transaction that is in the best interests of your
stockholders. Accordingly, we stand ready to meet with you at the
earliest possible time. Please contact me to arrange a meeting.
Very truly yours,
/s/ Gregory K. Hinckley
Mentor Graphics Corporation
by Gregory K. Hinckley,
President and Chief Operating Officer
IMPORTANT INFORMATION
Fresno Corporation, a wholly-owned subsidiary of Mentor Graphics,
has commenced a tender offer for all of the issued and outstanding
shares of common stock of IKOS Systems, Inc. ("IKOS"), including the
associated preferred stock purchase rights, at the price of $11.00 per
share, net to the seller in cash, without interest. The offer
currently is scheduled to expire at 12:00 midnight, New York City
time, on Tuesday, January 8, 2001. Mentor Graphics may extend the
offer until the conditions to the offer, which are described in the
Offer to Purchase forming part of Mentor Graphic's tender offer
statement, are satisfied. If the offer is extended, Mentor Graphics
will notify the depositary for the offer and issue a press release
announcing the extension on or before 9:00 a.m. New York City time on
the next business day following the date the offer was scheduled to
expire. The complete terms and conditions of the tender offer are
contained in the Offer to Purchase included in the tender offer
statement to be filed today by Mentor Graphics with the U.S.
Securities and Exchange Commission ("SEC"). Investors and security
holders may obtain a free copy of the tender offer statement and other
documents filed by Mentor Graphics with the SEC at the SEC's website
at http://www.sec.gov. The tender offer statement may also be obtained
by contacting MacKenzie Partners, Inc., the information agent for the
offer, at (800) 322-2885 (toll free) or at (212) 929-5500 (collect) or
by email to: proxy@mackenziepartners.com.
THIS PRESS RELEASE IS NEITHER AN OFFER TO PURCHASE NOR A
SOLICITATION OF AN OFFER TO SELL SECURITIES. THE TENDER OFFER WILL BE
MADE ONLY THROUGH AN OFFER TO PURCHASE AND RELATED LETTER OF
TRANSMITTAL. INVESTORS AND SECURITY HOLDERS ARE STRONGLY ADVISED TO
READ THE TENDER OFFER STATEMENT REGARDING THE TENDER OFFER REFERRED TO
IN THIS PRESS RELEASE, WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL
CONTAIN IMPORTANT INFORMATION.
Forward-Looking Statements
The statements contained in this press release that are not
statements of historical fact, including without limitation,
statements containing the words "believes," "expects," and words of
similar import, constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that
involve a number of risks and uncertainties that are difficult to
predict. Moreover, from time to time Mentor Graphics may issue other
forward-looking statements. Actual outcomes and results may differ
materially from what is expressed or forecast in forward-looking
statements. Factors that could cause or contribute to actual results
differing materially from such forward looking statements are
discussed in greater detail in Mentor Graphics' SEC filings. Mentor
Graphics disclaims any obligation to update forward-looking statements
to reflect future events or revised expectations.
About Mentor Graphics
Mentor Graphics Corporation (Nasdaq: MENT - news) is a world leader in
electronic hardware and software design solutions, providing products,
consulting services and award-winning support for the world's most
successful electronics and semiconductor companies. Established in
1981, Mentor Graphics reported revenues over the last 12 months of
more than $600 million and employs approximately 3,000 people
worldwide. Corporate headquarters are located at 8005 S.W. Boeckman
Road, Wilsonville, Oregon 97070-7777; Silicon Valley headquarters are
located at 1001 Ridder Park Drive, San Jose, California 95131-2314.
World Wide Web site: www.mentor.com.
Mentor Graphics is a registered trademark of Mentor Graphics
Corporation. All other company or product names are the registered
trademarks or trademarks of their respective owners.
Contact:
Mentor Graphics Corporation
Ryerson Schwark, 503/685-1660
or
Abernathy MacGregor Group
Chuck Burgess
Jason Thompson
212/371-5999
