Mentor Graphics board of directors affirm commitment to strategic plan

WILSONVILLE, USA: Mentor Graphics Corp. announced that its Board of Directors has determined that the continued execution of the company’s strategic plan offers the greatest value to Mentor Graphics shareholders.

In reaching its unanimous decision, the Board concluded that the $17 per share proposal made by Carl Icahn and certain of his affiliated entities undervalues the company and its future prospects. The Board also determined that Icahn’s proposal that Mentor put itself up for sale to a strategic buyer entails significant commercial and regulatory risk and is therefore not in the best interest of the company and Mentor’s shareholders.

“Our Board believes that the continued execution of our strategic plan offers the greatest value to Mentor shareholders and that it will drive further growth and continued success,” said Walden C. Rhines, CEO and chairman of Mentor.

“Our fiscal year ended January 31, 2011, was a record year for Mentor and we expect our positive momentum to continue in the current fiscal year and beyond. Our share price has grown by more than 70 percent over the last year, for a two year aggregate growth of approximately 200 percent, significantly outperforming our peer group and the market. We will continue to focus on market-leading positions in traditional Electronic Design Automation markets and new EDA adjacent markets while maintaining rigorous cost controls and balanced investments. These outstanding results and our strong projections demonstrate that our strategy is working.”

The Board confirmed that it remains open to any opportunity to enhance shareholder value.

The Board noted, however, that when Cadence Design Systems Inc. made an unsolicited proposal to acquire the company in 2008, the company undertook an analysis of the regulatory risks inherent to any combination with Cadence or Synopsys, Inc. (NASDAQ: SNPS), the two companies that could be logical strategic buyers. That analysis demonstrated serious regulatory risks associated with a combination with either Cadence or Synopsys.

The company has updated its analysis in connection with Mr. Icahn’s proposal that the company be put up for sale. The updated analysis shows that serious regulatory risks persist. The Board also noted that any discussions concerning a combination with Cadence or Synopsys entail risks to the growth and stability of the company’s customer base and the company’s relationship with its employees.

This could result in serious adverse effects if discussions are commenced but a transaction is not completed. Accordingly, while the Board remains open to proposals from third parties that enhance shareholder value, it has determined that this is not the time to put the company up for sale.

Goldman, Sachs & Co. is serving as financial advisor to Mentor Graphics and Latham & Watkins LLP is serving as legal counsel.