Subject: MENT Board warns of Anti-Trust issues in a CDNS or SNPS merger

Two weeks ago on March 11th, I released a DeepChip survey of 307 EDA users
where 88% of MENT customers dreaded a Synopsys-Cadence duopoly forming:

  "The more competition there is, the better products become in general.
   Less competition, less need for Synopsys and Cadence to innovate to
   keep their customers."

       - Darren Galpin of Infineon in ESNUG 489 #2

  "It would be a huge mistake removing one of the EDA vendors.  What
   a way to drive up prices and stifle innovation.  We don't need
   less vendors, we need more!

       - Howard Baumer of Mobius Semiconductors in ESNUG 489 #2

Part of what triggered these fears was a $1.91 billion offer by Carl Icahn
to sell off MENT plus a WSJ quote by a CDNS bigwig:

  "A lot of the inherent costs can be stripped out, and Mentor has some
   amazing point-tool technologies that can be integrated in an end-to-end
   offering.  But would the amount of extra work really add value?"

       - Cadence CMO John Bruggeman in the WSJ 02/22/11

A retort to this came from EDA industry analyst Gary Smith in the Oregonian.
Smith warned that Cadence had $1 billion in long term debt so CDNS making a
play on MENT was quite unlikely and:

  "They tried it before and they ran into trouble.  I think they're just
   trying to make trouble, put a scare into the Mentor customer base."

       - Gary Smith in the Oregonian on 02/22/11

The problem was that Bruggeman's comments ran in the widely read Wall Street
Journal, whereas Smith's counter appeared only in the Oregonian.

What inflamed these fears even further was a month later on 03/22/11, Donald
Drapkin of Casablanca Capital openly discussed on CNBC a MENT-CDNS merger.

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THE MENT BOARD OF DIRECTORS REACTS:

On Monday, the Mentor Graphics Board of Directors put out a statement that
they had earlier studied in 2008 the possibility of MENT merging with either
CDNS or SNPS and 

  "That analysis demonstrated serious regulatory risks associated
   with a combination with either Cadence or Synopsys.  The company
   has updated its analysis in connection with Mr. Icahn's proposal
   that the company be put up for sale.

   The updated analysis shows that serious regulatory risks persist."

       - Mentor Graphics press release of 03/28/11

Which is their polite way of warning any MENT-CDNS or MENT-SNPS merger is
going to run into massive headaches with the Sherman Anti-Trust Act.

What's interesting here is that if MENT is NOT sold to SNPS/CDNS (in parts
or in whole) it effectively kills how Carl Icahn was going to make money in
a MENT deal.  That is, if MENT was sold to say TSMC, TSMC would still need
to keep most of the MENT management & sales people around just to sell the
MENT EDA tools.  But if Cadence swallowed MENT, Cadence could fire the MENT
management & sales staffs because Cadence already has their own people to
do those jobs.  It's the dumping of the duplicate managment and sales staffs
is where Icahn's deal makes money; otherwise Icahn's deal is a bust!

In addition, the MENT Board rejected Icahn's $17 a share take-over offer
and on Tuesday MENT announced it plans to sell up to $253 million in
convertible debt -- thus making MENT a less juicy merger candidate.

Later on that same Tuesday, a furious Carl Icahn publically offered to loan
MENT the $220 million to keep it a more viable merger candidate.