What Icahn Wants

Carl Icahn made it official today, offering roughly $1.9 billion for Mentor Graphics, or $1 a share more than Cadence offered in summer of 2008.

But it’s clear from the seven sentence letter that Icahn has no desire to own the PCB/EDA software company. As he states 

There will be no financing conditions. Furthermore, we will not insist upon providing for a break-up fee in the transaction so as not to provide a roadblock to others who may want to consider bidding higher than our bid.

In other words, “I don’t want to own you. I just want to maximize the cash I can get for you.”

There are three obvious bidders for Mentor: Synposys and Cadence on the semi design business side, and Cadence and Zuken in the PCB space. That said, Synposys has shown no interest in the PCB side, and Cadence has a relatively new CEO who owes his job in part to the bungled attempt of his predecessor to buy Mentor. I can’t see Cadence making much of a play at this time. Zuken has plenty of cash and hasn’t been able to crack open the North American market (its share as of March 2010 was about 5%); this is a prime opportunity.

Given Icahn’s track record, the odds are growing long that the Mentor of 2012 will look much like the Mentor of today.