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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
(AMENDMENT NO. 34)
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
QUICKTURN DESIGN SYSTEMS, INC.
(Name of Subject Company)
QUICKTURN DESIGN SYSTEMS, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(including the associated preferred stock purchase rights)
(Title of Class of Securities)
74838E102
(CUSIP Number of Class of Securities)
KEITH R. LOBO
President and Chief Executive Officer
Quickturn Design Systems, Inc.
55 W. Trimble Road
San Jose, California 95131
(408) 914-6000
(Name, address and telephone number of person authorized to receive
notice and communications on behalf of person(s) filing statement)
COPY TO:
LARRY W. SONSINI, ESQ.
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
(650) 493-9300
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INTRODUCTION
The Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9"), originally filed on August 24, 1998, by Quickturn Design Systems,
Inc., a Delaware corporation (the "Company" or "Quickturn"), relates to an
offer by MGZ Corp., a Delaware corporation ("MGZ") and a wholly owned
subsidiary of Mentor Graphics Corporation, an Oregon corporation ("Mentor"),
to purchase outstanding shares of the common stock, par value $.001 per share
(including the associated preferred stock purchase rights), of the Company.
All capitalized terms used herein without definition have the respective
meanings set forth in the Schedule 14D-9.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
The response to Item 4 is hereby amended by adding the following after the
final paragraph of Item 4(a):
On January 6, 1999, Mentor announced that it was increasing its offering
price for 2,100,000 shares of the Company to $15.00 cash per share from
$14.00 cash per share (the "Revised Offer"). Mentor has stated that the
Revised Offer, if successfully consummated and when combined with Mentor's
current holdings, would result in Mentor holding approximately 14.9% of the
Company's outstanding shares.
On January 6, 1999, the Board of Directors of Quickturn met with its
financial and legal advisors to consider the Revised Offer and, at the
conclusion of such meeting, determined that the Revised Offer is not in the
best interests of Quickturn and its stockholders for the reasons set forth
under Item 4(d) below.
ACCORDINGLY, THE BOARD RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS REJECT
THE REVISED OFFER AND NOT TENDER THEIR SHARES PURSUANT TO THE REVISED
OFFER.
A copy of the Company's press release relating to the Board's
recommendation is included as Exhibit 72 hereto and is incorporated herein
by reference.
The response to Item 4 is hereby amended further by adding the following
after the final paragraph of Item 4(c):
(d)Reasons for the Recommendation to Reject the Revised Offer.
In determining that the Revised Offer is not in the best interests of
Quickturn and its stockholders, and in making its recommendation that
Quickturn stockholders reject the Revised Offer, the Board considered the
following reasons and factors:
. The Board of Directors noted that, other than the change in price,
Mentor's most recent partial tender offer was substantially similar to
the partial tender offer made by Mentor on December 28, 1998, which the
Board has already rejected.
. The Board noted that the Revised Offer, which continues to be limited to
an offer to purchase 2,100,000 shares, again purports to be part of a
process pursuant to which Mentor proposes to undertake a "second-step
merger." The purported second-step merger is now subject to both new
explicit conditions and additional unspecified conditions. One such
condition is Mentor obtaining necessary financing to pay $15.00 per
share for all outstanding Quickturn shares. As Mentor has admitted, it
is has not yet been able to confirm that its existing bank financing
commitments and its other available funds are sufficient for such a
transaction. Such a second-step merger is also now conditioned on
Mentor's conduct of a due diligence investigation of the Company. For
these reasons, the Board of Directors determined that the likelihood
that such a second-step merger would actually occur is now less certain
than under Mentor's December 28 Revised Offer.
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. The Board determined that the Revised Offer could interfere with or
threaten Quickturn's proposed transaction with Cadence, which the Board
determined again to be in the best interests of the Quickturn
stockholders. The Board noted that the Revised Offer purported to be a
first step of a multi-step transaction that conflicts with the proposed
combination with Cadence.
. The Board noted that Mentor's ownership of 14.9% of the Quickturn's
shares, as well as its obtaining control of Quickturn's board of
directors, could raise serious concerns about Quickturn's ability to
engage in any "pooling-of-interests" transaction, including the proposed
combination with Cadence.
. The Board continues to believe that, even assuming Mentor could make a
firm offer to acquire all of Quickturn's shares at a price consistent
with its Revised Offer, the strategic combination with Cadence provides
substantial and superior long-term value for the Company, its
stockholders, employees and customers. In particular, the Board
continues to believe that the Cadence transaction offers substantial
strategic benefits to Quickturn which far exceed the consideration
proposed by Mentor.
. The Board considered potential antitrust issues raised by the Cadence
transaction. In this regard, the Board continues to believe that the
transaction does not raise significant antitrust issues.
. While Mentor's latest proposal is purportedly no longer conditioned on
the invalidation of any provision of the Cadence merger agreement,
several of the conditions to the purported second-step merger cannot be
satisfied without invalidation, violation or termination of the Cadence
merger agreement. In addition, Mentor has stated that it intends to
continue to challenge the Cadence merger agreement, an agreement that
the Board of Directors has determined to be in the best interests of the
Company's stockholders.
. The Board considered the potential harm to Quickturn, as well as the
Company's employees and customers, if Mentor were to become a 14.9%
stockholder of the Company. In this regard, given the litigation and
competition between the Company and Mentor, the Board considered the
potential negative impact on the Company if Mentor were to become a
large stockholder of the Company.
. Mentor's latest proposal no longer includes an intention to share with
the Company's stockholders the monetary benefit that might be obtained
from Mentor's invalidation of the termination fees that might otherwise
be payable under the Cadence merger agreement.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
The response to Item 9 is hereby amended by the addition of the following
new exhibit:
Exhibit 72 Press release of the Company dated January 7, 1999.
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: January 7, 1999 QUICKTURN DESIGN SYSTEMS, INC.
By: /s/ Keith R. Lobo
___________________________
Keith R. Lobo
President and Chief Executive
Officer
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EXHIBIT 72
CONTACTS:
QUICKTURN DESIGN SYSTEMS, INC. ABERNATHY MACGREGOR FRANK
Ray Ostby Pauline Yoshihashi
(408) 914-6000 (213) 630-6550
Matt Sherman
(212) 371-5999
FOR IMMEDIATE RELEASE
QUICKTURN'S BOARD REJECTS MENTOR'S JANUARY 6 REVISED UNSOLICITED
PROPOSAL TO ACQUIRE 2.1 MILLION SHARES OF QUICKTURN
MENTOR'S PURPORTED SECOND-STEP MERGER PROPOSAL CONDITIONS INCLUDE SECURING
FINANCING
QUICKTURN REMAINS COMMITTED TO STRATEGIC MERGER WITH CADENCE
SAN JOSE, Calif., January 7, 1999--Quickturn Design Systems, Inc. (Nasdaq:
QKTN) announced today that its Board of Directors rejected the January 6, 1999
revised unsolicited proposal by Mentor Graphics Corporation (Nasdaq: MENT) to
acquire 2,100,000 shares of Quickturn. The Quickturn Board continues to
strongly recommend that stockholders not tender their shares to Mentor's
partial tender offer, and urges Quickturn stockholders who may have tendered
to withdraw their shares.
In rejecting Mentor's revised partial tender offer, the Quickturn Board
considered, among other things, that Mentor's revised bid is not an offer for
all of Quickturn's outstanding shares, but rather is limited to an offer to
purchase 2,100,000 shares, or about 11.6%, of Quickturn. The Board also
considered the fact that Mentor's purported proposal for a second-step merger
is highly conditional and, among other things, is subject to Mentor's securing
necessary financing. Mentor's second-step merger proposal also is conditioned
on Mentor's ability to conduct due diligence, its negotiation of a merger
agreement with Quickturn, and other unspecified conditions. The Quickturn
Board also believes that Mentor's proposal could interfere with Quickturn's
definitive merger agreement with Cadence Design Systems, Inc. (NYSE: CDN),
which the Board reaffirmed is in the best interests of Quickturn and its
stockholders.
As previously announced on January 5, 1999, Cadence and Quickturn amended
their merger agreement to increase to $15 from $14 the amount of Cadence stock
that Quickturn stockholders will receive for each Quickturn share they own.
Under terms of the Cadence-Quickturn merger agreement, Cadence will acquire
Quickturn in a tax-free, stock-for-stock transaction with an aggregate
purchase price of approximately $271 million for all of the outstanding shares
of Quickturn.
Keith R. Lobo, president and chief executive officer of Quickturn, said,
"Quickturn's Board has accepted an offer from Cadence for 100% of Quickturn
that involves no financing issues, provides all Quickturn stockholders with
significant value for their shares, and allows them to participate in the
long-term benefits inherent in this strategic combination. In contrast,
Mentor's most recent proposal is not a real offer to purchase the entire
company, and Mentor has even stated that it does not have committed financing
for such a proposal. Mentor's latest proposal also imposes new conditions that
make its consummation even more uncertain. Further, as Mentor is well aware,
its proposal continues to impose conditions that violate the Cadence-Quickturn
merger agreement.
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"Mentor is simply trying to gain control of Quickturn through the back
door," added Mr. Lobo. "Our merger agreement with Cadence will be imperiled if
our stockholders vote to replace Quickturn's current directors with Mentor's
nominees. Cadence has noted that it will constitute a breach of the Cadence-
Quickturn merger agreement if Quickturn is forced to share confidential
information with Mentor--an expressed condition of Mentor's proposal.
Additionally, under certain circumstances, Mentor may be in a position to
block any pooling-of-interests transaction, including the Cadence merger.
Cadence has stressed that it will not proceed with the merger if pooling-of-
interests treatment is not available, thereby denying the benefits of the
transaction for all Quickturn stockholders. Put simply, the Quickturn Board
believes that our merger agreement with Cadence is the best way to deliver
superior value for 100% of Quickturn's outstanding shares."
Quickturn Design Systems, Inc. is the leading provider of verification
products and time-to-market engineering (TtME(TM)) 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 at 55 W. Trimble Road, San
Jose, CA 95131-1013; Telephone: 408/914-6000. For more information, visit the
Quickturn Web site at www.quickturn.com or send e-mail to [email protected].
