Opinion ID: 1508700
Heading Depth: 1
Heading Rank: 4

Heading: Mentor's Interest in Acquiring Quickturn

Text: Mentor began exploring the possibility of acquiring Quickturn. If Mentor owned Quickturn, it would also own the patents, and would be in a position to unenforce them by seeking to vacate Quickturn's injunctive orders against Mentor in the patent litigation. The exploration process began when Mr. Bernd Braune, a Mentor senior executive, retained Arthur Andersen (Andersen) to advise Mentor how it could successfully compete in the emulation market. The result was a report Andersen issued in October 1997, entitled PROJECT VELOCITY [9] and Strategic Alternatives Analysis. The Andersen report identified several advantages and benefits Mentor would enjoy if it acquired Quickturn. [10] In December 1997, Mentor retained Salomon Smith Barney (Salomon) to act as its financial advisor in connection with a possible acquisition of Quickturn. Salomon prepared an extensive study which it reviewed with Mentor's senior executives in early 1998. The Salomon study concluded that although a Quickturn acquisition could provide substantial value for Mentor, Mentor could not afford to acquire Quickturn at the then-prevailing market price levels. Ultimately, Mentor decided not to attempt an acquisition of Quickturn during the first half of 1998. After Quickturn's stock price began to decline in May 1998, however, Gregory Hinckley, Mentor's Executive Vice President, told Dr. Walden Rhines, Mentor's Chairman, that the market outlook being very weak due to the Asian crisis made it a good opportunity to try acquiring Quickturn for a cheap price. Mr. Hinckley then assembled Mentor's financial and legal advisors, proxy solicitors, and others, and began a three month process that culminated in Mentor's August 12, 1998 tender offer.