Icahn Offers $1.73 Billion for Mentor Graphics (MENT)

A day after he lost out on buying power company Dynegy Inc. (DYN), billionaire investor Carl Icahn has offered to buy yet another company, chip design software maker Mentor Graphics Corp. (MENT) in a deal valued at $17 per share, or about $1.73 billion, according to a company regulatory filing on Tuesday.

In a letter to the board of Mentor, Mr. Icahn, who holds a 14.7 percent stake in the co., wrote:

[The offer] represents an approximate premium of about 40 percent above the price at the beginning of January 2011….[and it] is conditioned on completion of cursory due diligence, and the redemption and waiver of anti-takeover devices and laws such as the poison pill. 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. As we have told you, we believe that there are potential strategic bidders for Mentor Graphics whose bid will reflect inherent synergies and should be superior to our $17 offer.

The offer, which currently values the Wilsonville, Oregon-based Mentor at 20x fiscal 2012 earnings, compared with its current multiple of 17x, represents a 17% premium to the co.’s closing price of $14.52 on Friday.

Mentor so far has not responded to the bid.

Shares of Mentor Graphics rose $1.64, or 11.43%, to $16.16 in morning trading during Tuesday. Volume of 5 million MENT shares is already more than 4x the daily average volume of 895K shares.

Update:

Mentor Graphics Corp. confirms that it has received an unsolicited conditional proposal from the Icahn Group. The company’s Board of Directors says it will review the proposal including any trade regulation limitations that may apply to alternate proposals and make a recommendation to shareholders in due course.

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