Electronic design software house Mentor Graphics Corp, which is involved in a hostile attempt to acquire Quickturn Design Systems Inc, has called a special meeting of Quickturn’s shareholders to vote on replacing the target company’s board with independent directors which it has nominated. Mentor said that more than 39% of Quickturn’s common shares had been tendered in its all-cash $12.125 per share offer – valuing the deal at $216m – giving it enough support to call the special meeting, set for October 29. The news follows a statement issued last Thursday by Quickturn’s senior management reiterating its opposition to the proposed deal and urging shareholders to reject it (CI No 3,493). If Mentor manages to get its proposed board installed, it will work toward the acceptance of the offer, most notably through the amendment of the company’s bylaws with regard to its poison pill takeover defense. In their current state, the bylaws impose a six-month delay in making any changes to the defense plan after new directors are elected. Quickturn, for its part, acknowledged it had received agent designations to call the special meeting, but said that a date has not been set. Its board will appoint an independent inspector of elections to determine the validity of Mentor’s latest move. If and when that validity is determined, its board of directors will set the meeting date. Quickturn’s current bylaws also say that such a meeting would have to take place somewhere between 90 and 100 days from the date of its decision on validity – another provision Mentor is fighting to eradicate. Quickturn has said all along that Mentor’s offer does not represent fair value for the company, while Mentor counters that its prey has seen earnings decline steadily since 1996. As proof of the current dismal situation at Quickturn, Mentor points to the company’s recent (less than a month before Mentor launched its bid) decision to lower the exercise price on all employee stock options to $7.44 per share – a price which Mentor feels is indicative of its fair market value.
