Mentor Graphics (Nasdaq: MENT) is one stiff-necked operation. The company just won't go gently into that good night, as it were.

With a bona fide buyout bid of $17 per share from famed activist investor Carl Icahn on the table, Mentor has flat-out rejected Icahn's advances. Mentor's board of directors voted unanimously to shoo Icahn away, and then reinforced the message by saying that Icahn's suggestion to put the company up for sale would be a bad idea.

"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 Mentor CEO Walden Rhines. The company "remains open to any opportunity to enhance shareholder value," or so it says.

Oh, but that's not enough: Mentor also decided to raise at least $220 million in fresh convertible debt, which immediately makes the company more expensive for a prospective buyer. Icahn hates that, of course.

When Cadence Design Systems (Nasdaq: CDNS) made an unwelcome and unsolicited takeover bid three years ago, Mentor conducted an analysis of regulatory merger risks and came away thinking that neither Cadence nor Synopsys (Nasdaq: SNPS) would be allowed by regulators to close a merger. Icahn's bid prompted an updated analysis, with all the same conclusions.

However, regulatory concerns didn't stop AT&T (NYSE: T) from placing a bid on rival T-Mobile in spite of serious and obvious competitive concerns, nor did such issues stop enterprise computing giant Oracle (Nasdaq: ORCL) from taking Sun Microsystems home for keepers. Mentor says that it's worried about scaring away customers and crucial employees with merger talks, but again, tech industry precedents aplenty would suggest that deal talks are all right.

Well, whatever -- the board has spoken and the maker of chip-design tools doesn't want to go anywhere. I should note that CEO Rhines also chairs the board of directors, giving him a lot of power over both strategic direction and its execution. He holds a measly $7 million worth of Mentor stock, and insiders control just 0.7% of the shares outstanding, which makes me question how well management's interests are aligned with those of shareholders.

Icahn just happens to be Mentor's largest owner with 14% of its shares. Is it really wise to ignore the voice of your biggest shareholder so blatantly? Well, maybe when you can hide behind a poison pill provision that was adopted without shareholder approval in order to fend off exactly this kind of Icahn-powered dilemma.

As Icahn puts it: "After 17 years of a stock that has done nothing, isn't it time for the shareholders to be given every opportunity to determine if they want to sell their company rather than to have these opportunities sabotaged?"

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