SAN DIEGO — EDA software giant Cadence Design Systems Inc. is in discussions with equity firms to go private, according to a report from the New York Times.
Cadence has been in talks with Kohlberg Kravis Roberts and The Blackstone Group, according to the report.
Shares of the EDA firm were up 7 percent to over $24 in heavy trading on Monday (June 4) afternoon. Recently, Cadence (San Jose, Calif.) reported first quarter 2007 revenue of $365 million, an increase of 11 percent over the $328 million reported for the same period in 2006. On a GAAP basis, Cadence recognized net income of $44 million, or $0.15 per share on a diluted basis, in the first quarter of 2007, compared to $22 million, or $0.07 per share on a diluted basis, in the same period in 2006.
If Cadence goes private, the move would represent one of the first EDA houses to go down that route. Chip makers Freescale, NXP and others have gone private, while AMD, Micron and others are reportedly mulling over a similar plan.
Some were unsure about a buyout in the EDA industry, however. A private equity buyout would probably be a good deal for Cadence management and existing shareholders, but not necessarily customers, said Erach Desai, analyst at America's Growth Capital.
"For cost savings, they're going to slash expenses, and that means people," Desai said. "Some cuts in sales and marketing may be justified, but they're also going to push into R&D and applications with cuts too."
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