September 22, 1997, Issue: 972
Section: Business
The Buzz
By
Making deals: Right after Avant! Corp. announced the completion of its
Compass Design Automation purchase Sept. 12, former Compass parent
VLSI Technology Inc. disclosed it would buy $21 million in Avant!
physical-design and verification tools. Avant!, meanwhile, paid $17.5 million and 522,192 shares of stock for Compass-totaling roughly $35.5 million,compared with the announced $44 million purchase price. Avant! laid off nearly half of Compass personnel and announced it will take a "significant charge" for in-process research and development for the third quarter.
Any idea why final price for Compass was much less than the previously announced price? With the decrease in stock valuation, it appears the Compass shareholders current value is even less.
I imagine the TMA board may be concerned about this considering they have a $150,000,000 cash and stock deal, although it appears that they
may not be overly concerned:
Jewell said other EDA companies were looking to acquire TMA, but that it chose Avant! after discussions with customers. TMA took a thorough look at Avant!'s legal problems-including a civil suit with Cadence and the recent indictment of several executives on charges of stealing software code-and decided the merger was still "the best decision for the company's shareholders," Jewell said.
Does anyone have opinions regarding this transaction? Will it still be heavily weighted with stock, and if so how many more additional shares
if the price continues to show some instability?
Or would it be in the best interests of the shareholders to change this to an all cash deal, because of the ongoing litigation?
If it remains a stock/cash deal and the stock drops after it closes
because of litigation, does the TMA board have potential liablity to consider? |
