Because Mentor and VeriBest have directly competing pc-board layout systems, users of both will likely have to transition to new technology. Meanwhile, the fate of VeriBest's other tools, including an FPGA product line that includes an OEM version of the Synopsys FPGA Express synthesizer, is yet to be determined.

Mentor stock rose nine percent after the acquisition was announced Monday, Nov. 1. For Intergraph, it's the end of a long attempt to break into EDA, starting with the purchase of the bankrupt Daisy-Cadnetix organization nearly 10 years ago. VeriBest, spun out in 1996, never attained profitability or significant growth, and recently underwent a round of layoffs.

Mentor, once the market leader in pc-board CAD, has been hobbled by lack of a competitive autorouter since an OEM deal for Cadence Design Systems' Specctra autorouter collapsed last year. Ironically, VeriBest last month took aim at Mentor's apparent weakness with an aggressive campaign to replace Mentor's Board Station products with VeriBest tools.

The VeriBest acquisition should put to rest intense speculation about a possible Mentor Graphics purchase of some portions of Zuken-Redac. Last month, Zuken officials confirmed that such negotiations were taking place.

The lack of routing technology formed a "fairly large hole" in Mentor's pc-board offerings, said Henry Potts, vice-president and general manager of Mentor's board design solutions unit. "By not having the ability to offer one continuous flow, we weren't able to satisfy all the requirements of our customers," he said.

VeriBest's attempt to position itself for an initial public offering (IPO) "stretched out too long," said Jim Medlock, Integraph president and CEO. "We had hoped to have VeriBest successful on its own. We didn't quite get there, although I think the product is outstanding. This is the end of Intergraph in EDA."

Although VeriBest originally had a broad-line focus, the company's revenues are now mostly from pc-board CAD tools, and last month VeriBest launched its "Freedom" series in an attempt to break into the Board Station user base. As of Nov. 1, VeriBest's web site — by then owned by Mentor — still had a banner headline that asked, "Dead in the water with your Mentor PCB design system?"

"Their customer base was susceptible to a new product," said Medlock. "Obviously our marketing people, who knew nothing about who we were talking to, went after them [Mentor]. It's what you would expect."

Potts acknowledged that there's some truth to VeriBest's recent claims. "Factually, the product that we acquired is the latest generation of PCB technology in the industry," he said. "When we really merge the companies, I think we'll find pieces of technology that are superior on both sides."

Since Mentor doesn't have a competitive autorouter, bringing VeriBest's Destination autorouter into the picture is an obvious decision, although it requires a Unix port. A much harder question is what to do about two head-on competitors in the layout space — Board Station and VeriBest's Expedition PCB.

While Potts said that whatever emerges will probably be "a hybrid of both," he also said that Mentor will "facilitate a move forward to VeriBest technology. That transition will take place over the next 18 months." He noted that Mentor intends to field just one pc-board CAD solution in the long run.

Potts emphasized, however, that there will be no sudden migration for Board Station users, and that existing investments in libraries and databases will be preserved.

Meanwhile, Potts signaled Mentor's intent to go head-to-head with Cadence's Specctra autorouter, which is widely resold through third-party vendors. In the first quarter, he said, Mentor will go after Cadence Allegro users with the "technically superior" VeriBest router, and he also said Mentor will be "very open" to any third-party relationships.

Potts wasn't able to shed much light on what will happen to VeriBest's schematic entry, analog design, VHDL and Verilog simulation, and FPGA design products, except to say that all will be supported for now. "There will be a rationalization of the product lines, and there will be a reasonable transition path if we make a change," he said.

Analysts were generally favorable about the acquisition. "The router will certainly put them [Mentor] in a better position," said John Barr, analyst at Needham and Co. He noted that pc-board CAD represents 20 percent of Mentor's revenues, and that the company had a compelling need to "either fix it or get out."

While the router was badly needed, the acquisition leaves Mentor with overlapping product lines, noted Jennifer Smith, analyst at Dain Rausher Wessels. Thus, she said, the company must quickly communicate to users which products will survive.

"From Mentor's perspective, it's a good move to fill in a technology gap. From Intergraph's, it's a good move to get an asset that's really failing off their books. But they've got to resolve the product overlap," said Dave DeMaria, general manager of Cadence's performance engineering unit.

Asked about the VeriBest router, DeMaria replied, "in some benchmarks we beat them, in some they beat us. For smaller designs, they're faster. But for larger designs with high-speed rules, Specctra still dominates."

The purchase is a sign of ongoing consolidation in the pc-board CAD industry, DeMaria said. "I really predict there's going to be two or three full-line suppliers in this space," he said. "Those will include Cadence and Mentor, and others are still up for question."

The acquisition has the potential to create "fear and uncertainty in the customer base," said Rick Almeida, vice-president of marketing at PADS Software. He noted that neither company has a good distribution channel for the mainstream or shrink-wrapped marketplaces.

VeriBest employed around 200 people, all of whom are now Mentor employees. It is unknown whether the VeriBest name will survive.