Mentor Graphics Corp. has made a $160 million cash offer to buy Innoveda Inc., its competitor in the pc-board and cable-harness design markets. The offer follows a venture capital group's purchase of Innoveda's system-design business, which will spun off under its earlier name, Summit Design.
Innoveda's board has backed the Mentor offer. The purchase will give Mentor a third pc-board tool line-up, in addition to its BoardStation suite and the Expedition tools it picked up with the purchase of Veribest in 1999.
Innoveda added the PowerPCB product when it acquired PADS Software in 2000, expanding its line of signal-integrity and design-capture tools.
It is not clear if Mentor will merge PowerPCB with one of its existing tools or manage it as a distinct product line. "There has been no determination yet on product plans," Will Herman, chairman and chief executive officer of Innoveda, told EETimes.
"It is the belief of the industry that there will be consolidation in pc-board design," Herman said. "A broader product line is what customers are looking for. In the vendors, there is a lot of interest in consolidation."
Henry Potts, vice president and general manager of Mentor's system design division, said: "Innoveda's technology, products and road map provide additional components for the realization of our product strategy."
Although both Innoveda and Mentor offer electromechanical design tools aimed primarily at the automotive segment, Herman said the companies' customer bases do not overlap much. "Mentor and Innoveda are focused on two different areas," he said.
Herman said he will stay with the merged company "for a transition period." It is uncertain how many other Innoveda employees will stay with Mentor. They will not be covered by lock-in deals. "Anybody who will stay will stay because it makes sense for them. Locking people up does not make any sense," said Herman.
Return to Summit
Summit will take back the Innoveda system-level design tools business following its buyout by venture capitalist Divestiture Growth Capital for an undisclosed amount.
Innoveda was formed when Summit merged with Viewlogic in 2000, following Viewlogic's separation from Synopsys Inc.
In its last 10-K annual filing with the U.S. Securities and Exchange Commission, Innoveda said system-level tools accounted for 22 percent of its 2001 business but that sales had been falling.
"System-level design is an emerging market with new methodologies that require intense focus and commitment of resources, particularly in sales and engineering," Herman stated in the filing.
Following Mentor's offer for Innoveda, Herman said: "As we said four months ago, the legacy system-level product line was declining. The next-generation products are early adopter products in a tough economy."
Larry Gerhard, who left Summit in 1999 after the cancellation of a merger with Orcad Inc., has been recruited to head the management team at the new Summit. He returns from a three-year stint at eVineyard, a wine dot-com.
Guy Moshe will join Gerhard on the Summit management team. Based in Israel, he acted as general manager of Summit before Gerhard. Most recently, he was general manager of the Innoveda business unit that will now form Summit.