Would anyone care to comment on the Orcad deal?
Cadence to Acquire OrCAD
Worldwide EDA Leader and Shrink-Wrap PCB Market Leader Build EDA
Powerhouse to Address Requirements of Entire PCB Industry
SAN JOSE, Calif.--(BUSINESS WIRE)--June 15, 1999--Cadence Design Systems, Inc. (NYSE:CDN - news), the world's leading
provider of electronic design software and services, and OrCAD, Inc. (Nasdaq:OCAD - news) today announced a definitive
agreement under which Cadence will acquire OrCAD in a cash tender offer at $13 per share for a total purchase price of $121
million. Cadence's strength in high-end printed circuit board (PCB) design automation and OrCAD's leadership in the shrink-wrap
PCB segment will provide a platform for delivering complete PCB flows to the rapidly growing mainstream segment.
Cadence and OrCAD are premier suppliers of computer-aided engineering and computer-aided design tools for PCB electronic
design automation (EDA). Cadence estimates the PCB software and services industry to be at least $700 million in 1999. The
OrCAD acquisition by Cadence gives the combined company the EDA industry's largest customer base for PCB design software and
services -- spanning the high-end, mainstream, and shrink-wrap segments. OrCAD's recently announced Internet strategy will provide
significant benefits to Cadence customers as it is integrated into the Cadence PCB product line.
''The acquisition of OrCAD solidifies Cadence's position in the PCB market and provides immediate growth opportunities for our
existing software and services businesses. By leveraging OrCAD's highly successful telesales channel, we can bring our Windows
NT-based offering of high-speed PCB design and logic simulation products and services to OrCAD's 160,000 users, many of which
are moving up into the mainstream market,'' said Ray Bingham, president and chief executive officer at Cadence.
Bingham added, ''We think highly of OrCAD's accomplishments and are confident that OrCAD's outstanding management team will
add tremendous organizational strength as we combine forces to meet the evolving needs of PCB designers.''
The entire OrCAD organization will be combined with the Cadence PCB team into a single, focused PCB business group. The PCB
group will have a dedicated sales channel, research and development, services, marketing, and customer support functions. OrCAD's
chief executive officer, Mike Bosworth, will lead the new PCB group and report directly to Shane Robison, president of the Cadence
Design Productivity Group. The Design Productivity Group is responsible for Cadence's EDA products and services. Dave DeMaria
will run marketing for the new PCB business group reporting to Bosworth. DeMaria led Cadence's PCB business to market
leadership and oversaw the successful integration of Cooper & Chyan Technology, Inc. into the Cadence PCB portfolio.
Converging on Market Opportunities
According to Bosworth, the acquisition by Cadence directly targets the converging requirements of today's three distinct PCB
segments: high end, shrink-wrap, and mainstream. Dataquest refers to mainstream as the ''ready-to-use'' segment and estimates it to
be growing at a five-year compound annual rate of approximately 36 percent.
OrCAD customers will benefit from Cadence's high-speed interconnect design, high-performance PCB layout, and Verilog/VHDL
simulation technologies. Cadence customers will benefit from OrCAD's innovative Internet-based component information solution and
access to the OrCAD PSpice analog design tool.
Commenting further, Bosworth stated: ''OrCAD has built a profitable, growing business that services designers in many different
industries. It is this success in the marketplace that attracted Cadence to consider our complementary products, market strengths, and
channel strategies. Together, we can provide customers in all segments with access to a complete high-speed, signal integrity-based
PCB flow and improved productivity at the enterprise level.''
PCB Market Strategy
The two companies will rapidly combine their existing products into enhanced PCB flows for the high-end, mainstream and
shrink-wrap segments. They will also integrate their technologies over time to develop new, improved products that meet the future
needs of their combined customer base.
Specifically, Cadence will integrate OrCAD's PCB and field programmable gate array (FPGA) design tools -- which includes OrCAD
Capture/CIS, OrCAD PSpice, OrCAD Express, and OrCAD Layout -- with the Cadence Intrica(TM) family of PCB tools. The
Intrica family includes such familiar Cadence names as the Concept® HDL, Allegro®, SPECCTRA®, and SPECCTRAQuest(TM)
products. The Cadence Intrica PCB flow with the addition of the OrCAD PSpice tool will be marketed to high-end PCB users. The
OrCAD PCB/FPGA product family will be marketed to the shrink-wrap segment.
The combined company will address the rapidly growing mainstream, ready-to-use PCB segment, as well as the emerging EDA
enterprise market, by combining OrCAD's front-end design tools with the Cadence Affirma(TM) family of Verilog and VHDL logic
simulation products and the Intrica high-speed PCB tools.
The combined offerings will support customers with complete tool suites on the Windows, Windows NT and UNIX-based operating
platforms. These will be sold through a combination of Cadence's direct sales and services team focused on large, global accounts;
value-added resellers; and OrCAD's well-established telesales and telebusiness channels for the broader customer base.
Terms of the Agreement
Cadence said the acquisition would be accounted for under the purchase method of accounting. The transaction is structured as a cash
tender offer for all OrCAD shares at $13 per share, for a total purchase price of $121 million. Following completion of the tender
offer, any shares not tendered will be acquired, at the same price per share, through a merger. The tender offer will commence within
five business days, and tendered shares will be purchased at the end of 20 business days thereafter, assuming all conditions to the offer
have been met.
The acquisition has been approved by the boards of directors of both companies and is subject to certain conditions, including
compliance with applicable regulatory requirements and approval by OrCAD's shareholders. Holders of approximately 20 percent of
OrCAD's common stock have agreed to tender all of their shares in the offer. |
