Cadence and Quickturn Agree to Merge
Stock-for-Stock Transaction Valued at $253 Million; Value of $14 per
share to Quickturn Shareholders
SAN JOSE, Calif. December 9, 1998 Cadence Design Systems, Inc.
(NYSE:CDN) and Quickturn Design Systems, Inc. (NASDAQ:QKTN) today announced that the
boards of directors of both companies unanimously approved a definitive merger agreement
under which Cadence will acquire Quickturn in a tax-free, stock-for-stock transaction with
an aggregate purchase price of $253 million. Upon closing of the merger, each shareholder
of Quickturn will receive Cadence common stock with a value of $14 per share.
Quickturn is a leading provider of emulation systems and time-to-market engineering
(TtMETM) services for the verification of complex integrated circuits (ICs) and electronic
systems. Cadence is a world leader in electronic design software and services.
Jack Harding, President and CEO of Cadence, said: "We are presenting Quickturn's
shareholders with an extraordinary opportunity to participate in the increased growth and
earnings potential that this very compelling business combination will deliver.
"As the complexity of chip design increases, the complexity of verification
increases exponentially. By integrating Quickturn's hardware-based emulation approach with
our software design and simulation systems, we will dramatically improve our ability to
meet customer demand for faster development of high-speed systems on a chip. We believe
this merger will be seen as an important milestone in the development of next generation
verification solutions," Harding said.
"The combination of Cadence and Quickturn meets our objectives for growing our
business through acquisitions of complementary businesses that have management depth and
engineering talent," Harding added. Keith R. Lobo, President and CEO of Quickturn,
said: "A merger with Cadence is a superior outcome for our shareholders, our
employees, and our customers, and allows Quickturn to continue to pursue its business
strategy. Cadence has a proven business strategy, a strong balance sheet and an excellent
track record in acquiring and integrating companies. We believe our shareholders will
recognize the value of this combination, which yields both short-term benefits and
tremendous potential upside in the long term. We look forward to leveraging Cadence's
strong international sales channels to make our technology available to a larger customer
Terms of the Merger Agreement
Cadence said the merger would be accounted for as a pooling of interests and that it
expects the transaction to be accretive to earnings in 1999. As a result of the merger,
Quickturn will become a wholly-owned subsidiary of Cadence.
Quickturn has issued Cadence an option to purchase 19.9% of the outstanding common
stock of Quickturn for $14 a share, which will become exercisable under certain
The merger is subject to certain conditions, including compliance with applicable
regulatory requirements, and approval by Quickturn's shareholders. It is expected to close
in the first quarter of 1999. Goldman, Sachs & Co. acted as financial advisor to
Cadence. Hambrecht & Quist LLC acted as financial advisor to Quickturn.
Cadence Design Systems, Inc. provides comprehensive services and software for the
product development requirements of the world's leading electronics companies. Cadence is
the largest supplier of software products, consulting services, and design services used
to accelerate and manage the design of semiconductors, computer systems, networking and
telecommunications equipment, consumer electronics, and a variety of other
electronic-based products. With more than 4,000 employees and 1997 annual sales of $916
million, Cadence has sales offices, design centers, and research facilities around the
world. The company is headquartered in San Jose, Calif. and traded on the New York Stock
Exchange under the symbol CDN. More information about the company, its products and
services may be obtained from the World Wide Web at http://www.cadence.com.
Quickturn Design Systems, Inc. is a leading provider of verification hardware and
time-to-market engineering (TtMETM) services for the design of complex ICs and electronic
systems. The company's products are used worldwide by developers of high-performance
computing, multimedia, graphics and communications systems. Quickturn is headquartered in
San Jose, Calif. For more information, visit the Quickturn Web site at http://www.quickturn.com or send e-mail to firstname.lastname@example.org.
This release contains forward-looking statements based on current expectations or
beliefs as well as a number of assumptions about future events, and that are subject to
factors and uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements. The reader is cautioned not to put undue
reliance on these forward-looking statements, which are not a guarantee of future
performance and are subject to a number of uncertainties and other factors, many of which
are outside the control of Cadence and Quickturn. The forward-looking statements in this
release address a variety of subjects including, for example, the expected date of closing
of the acquisition, the transaction being accretive to earnings in 1999, and the potential
benefits of the merger. The following factors, among others, could cause actual results to
differ materially from those described in these forward-looking statements: the risk that
Quickturn's business will not be successfully integrated with Cadence's business; costs
associated with the merger; the inability to obtain the approval of Quickturn's
shareholders; matters arising in connection with the parties' efforts to comply with
applicable regulatory requirements relating to the transaction; and increased competition
and technological changes in the industry in which Cadence and Quickturn compete. For a
detailed discussion of these and other cautionary statements, please refer to Cadence's
and Quickturn's filings with the Securities and Exchange Commission, including their
respective Annual Reports on Form 10-K for the year ended December 31, 1998 and their
respective Quarterly Reports on Form 10-Q for the quarter ended September 30, 1998.