Opinion ID: 1508700
Heading Depth: 1
Heading Rank: 6

Heading: Quickturn Board Meetings

Text: Under the Williams Act, Quickturn was required to inform its shareholders of its response to Mentor's offer no later than ten business days after the offer was commenced. During that ten day period, the Quickturn board met three times, on August 13, 17, and 21, 1998. During each of those meetings, it considered Mentor's offer and ultimately decided how to respond. The Quickturn board first met on August 13, 1998, the day after Mentor publicly announced its bid. All board members attended the meeting, for the purpose of evaluating Mentor's tender offer. The meeting lasted for several hours. Before or during the meeting, each board member received a package that included (i) Mentor's press release announcing the unsolicited offer; (ii) Quickturn's press release announcing its board's review of Mentor's offer; (iii) Dr. Rhines's August 11 letter to Mr. Antle; (iv) the complaints filed by Mentor against Quickturn and its directors; and (v) copies of Quickturn's then-current Rights Plan and by-laws. The Quickturn board first discussed retaining a team of financial advisors to assist it in evaluating Mentor's offer and the company's strategic alternatives. The board discussed the importance of selecting a qualified investment bank, and considered several investment banking firms. Aside from Hambrecht & Quist (H & Q), Quickturn's long-time investment banker, other firms that the board considered included Goldman Sachs & Co. and Morgan Stanley Dean Witter. Ultimately, the board selected H & Q, because the board believed that H & Q had the most experience with the EDA industry in general and with Quickturn in particular. [12] During the balance of the meeting, the board discussed for approximately one or two hours (a) the status, terms, and conditions of Mentor's offer; (b) the status of Quickturn's patent litigation with Mentor; (c) the applicable rules and regulations that would govern the board's response to the offer required by the Securities Exchange Act of 1934 (the 34 Act); (d) the board's fiduciary duties to Quickturn and its shareholders in a tender offer context; (e) the scope of defensive measures available to the corporation if the board decided that the offer was not in the best interests of the company or its stockholders; (f) Quickturn's then-current Rights Plan and special stockholders meeting by-law provisions; (g) the need for a federal antitrust filing; and (h) the potential effect of Mentor's offer on Quickturn's employees. The board also instructed management and H & Q to prepare analyses to assist the directors in evaluating Mentor's offer, and scheduled two board meetings, August 17, and August 21, 1998. The Quickturn board next met on August 17, 1998. That meeting centered around financial presentations by management and by H & Q. Mr. Keith Lobo, Quickturn's President and CEO, presented a Medium Term Strategic Plan, which was a top down estimate detailing the economic outlook and the company's future sales, income prospects and future plans (the Medium Term Plan). The Medium Term Plan contained an optimistic (30%) revenue growth projection for the period 1998-2000. [13] After management made its presentation, H & Q supplied its valuation of Quickturn, which relied upon a base case that assumed management's 30% revenue growth projection. On that basis, H & Q presented various standalone valuations based on various techniques, including a discounted cash flow (DCF) analysis. Finally, the directors discussed possible defensive measure, but took no action at that time. The Quickturn board held its third and final meeting in response to Mentor's offer on August 21, 1998. Again, the directors received extensive materials and a further detailed analysis performed by H & Q. The focal point of that analysis was a chart entitled Summary of Implied Valuation. That chart compared Mentor's tender offer price to the Quickturn valuation ranges generated by H & Q's application of five different methodologies. [14] The chart showed that Quickturn's value under all but one of those methodologies was higher than Mentor's $12.125 tender offer price.