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
However, regulatory concerns didn't stop AT&T
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?"
What will Mentor's final chapter look like? Make sure you don't miss it -- add the stock to your Foolish watchlist by clicking here.
Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Fool owns shares of Oracle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.