Tag Archives: Carl Icahn

New Leaders for Mentor?

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It’s one thing when one high-profile corporate raider wants a piece of you. But three?

That’s the queasy situation Mentor finds itself in today. The company’s board, which fended off Cadence a couple years ago, is now fighting for its life, having incurred the ire of two of its major shareholder groups by switching the date of its annual meeting, thus making it difficult for the dissidents to propose their own slates of directors. And they aren’t the only ones who could make life difficult for the EDA software company.

It’s never good to be in the middle of a battle with shareholders whose funding and access to capital is several times greater than yours. It’s especially not good when you have lost a net $65 million over three years and are seen as a bountiful treasure chest that just needs unlocking.

For 18 years Wally Rhines has been a steady hand at the helm of Mentor. Sadly, it’s looking more and more likely he won’t make it to 19.

Mentor’s Poison Pill

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Mentor isn’t going to let Carl Icahn break up the company without a fight.

That’s my take, given the EDA software company’s latest maneuver. Mentor has adopted something called a “Shareholder Rights Plan,” in which it will grant each of its shareholders the opportunity to purchase one discounted share for each share of common stock currently held. This option to buy kicks in if a person, alone or as part of a group effort, accumulates 15% or more of Mentor stock (or announces an offer to do so).

The move “enables the board to protect the company and to allow all of the shareholders to realize the long-term value of their investment,” the firm said in a press release.

This is a variation of the traditional poison pill defense some companies take when they are perceived to be in play by unwanted investors. The idea is to either slow down the third party, giving the board time to find a more desirable buyer, or to make it so expensive to acquire a controlling stake in the company, the third party will give up.

I, for one, am glad to see Mentor taking this step.

The Raider

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Look out, Mentor.

Noted investor/corporate raider Carl Icahn keeps upping his stake in the EDA company. At last report, it was 9.5% (that’s as of Tuesday), up from 6.86% a month ago. Reports hold that Icahn plans “to discuss ways to maximize shareholder value with the Mentor management.”

Even though the company’s stock is up more than 75% over the past year, Icahn’s interest can’t be comforting news to Mentor. Indeed, it may be that Icahn’s buying and holding (coupled with similar moves by those looking to draft off his moves) is helping boost the price.

In his 10+ years at the helm of Mentor, chairman and CEO Wally Rhines has been a good steward, hands-on and clearly vested in the long-term outcome of the company and the industry. Multi-billionaire raiders like Icahn might be able to “unlock” a little more wealth — but for whom, and at what cost?