I had a feeling Mentor Graphics would be purchased but when I made a list of possible acquirers Siemens was not on it. Same goes for ARM and SoftBank. So the $2B question is: Who would acquire Cadence?
A gentleman on Seeking Alpha is suggesting Cadence is next and here is his rational:
Acquisition Target
CDNS has partnership relationships with companies that it also competes with. I believe that one of these companies is a likely acquirer as the transaction would result in being accretive to earnings through cost reduction and end a bipolar relationship.
CDNS is one of only two major remaining players in the EDA arena and commands a higher multiple than Mentor Graphics which was acquired at a 21% premium to its market price. Mentor's products are considered lower quality than Cadence's, and Mentor Graphics did not dominate any market sector as does CDNS.
What makes CDNS an attractive acquisition is not only its market presence but also its strong cash flow generation. CDNS reported $693 million in cash and investments as of the end of the calendar year with free cash flow of $471 million for the fiscal year. The chart below illustrates the extended free cash flow rise.
80% of the cash is overseas. The new tax laws make for a compelling case that the funds may be used in the U.S. as almost half of the semiconductor companies surveyed by KMPG responded that they are most optimistic about business in the U.S
Cadence Design Systems: Good Bet On Earnings Or Buyout - Cadence Design Systems, Inc. (NASDAQ:CDNS) | Seeking Alpha
A gentleman on Seeking Alpha is suggesting Cadence is next and here is his rational:
Acquisition Target
CDNS has partnership relationships with companies that it also competes with. I believe that one of these companies is a likely acquirer as the transaction would result in being accretive to earnings through cost reduction and end a bipolar relationship.
CDNS is one of only two major remaining players in the EDA arena and commands a higher multiple than Mentor Graphics which was acquired at a 21% premium to its market price. Mentor's products are considered lower quality than Cadence's, and Mentor Graphics did not dominate any market sector as does CDNS.
What makes CDNS an attractive acquisition is not only its market presence but also its strong cash flow generation. CDNS reported $693 million in cash and investments as of the end of the calendar year with free cash flow of $471 million for the fiscal year. The chart below illustrates the extended free cash flow rise.
80% of the cash is overseas. The new tax laws make for a compelling case that the funds may be used in the U.S. as almost half of the semiconductor companies surveyed by KMPG responded that they are most optimistic about business in the U.S
Cadence Design Systems: Good Bet On Earnings Or Buyout - Cadence Design Systems, Inc. (NASDAQ:CDNS) | Seeking Alpha
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