DFT Digest

Here we go again… just as the furor from Cadence’s failed takeover bid and its subsequent fallout finally starts to die down, Virage Logic decides to make public its desires for LogicVision! In a letter dated December 2nd, Virage offered LogicVision shareholders $1.05 per share (about $10 million in cash).

Honestly, it seems about time someone made a play for LogicVision.  In fact, I commented on this over on Lou Covey’s State of the Media Blog, not too long ago, but when I wrote that, I had visualized LV being eaten by a bigger fish than Virage.  I was thinking Synopsys or Mentor, to tell the truth.  In my opinion, either one would’ve been a good fit.  LogicVision provides some strong products in weaker spaces among both Synopsys’ and Mentor’s offerings (LBIST, MBIST).

So what does LogicVision provide Virage?  Virage isn’t specific about that – in fact, in reading the proposal letter, the stated reasoning seems to be (and I’m paraphrasing),  “you’re weak, we got cash, that settles it“.  Of course there are “synergies” mentioned, but nothing specific.  I think LV would add quite a bit to Virage.

On the face of it, these companies are both IP companies, and both sell tools to facilitate the inclusion of that IP.  Virage dwells mostly in the world of memory, so the addition of LogicVision’s embedded test portfolio would significantly expand their reach into digital logic test, as well as BIST for high-speed and mixed-signal circuitry, and yield analysis tools.  The overlap is in the memory BIST solution; both companies have had tools for some time.  LogicVision used to be the main player in this space, but LogicVision has been struggling lately.  Three execs were let go in October, following layoffs about a year ago.

It’s kinda fun how these hostile takeover letters read, though, isn’t it?.  They all start off with a “since you won’t return our phone calls” paragraph.

“We are sincerely disappointed in your unwillingness to engage in any substantive discussions regarding our indication of interest transmitted to you on November 10^th regarding an all-cash acquisition of LogicVision, Inc. by Virage Logic Corporation.”

Compare with Cadence:

“Over the last two months, we have sought to engage you and your Board of Directors in discussions regarding our proposal to combine Cadence Design Systems, Inc. and Mentor Graphics Corporation. We are disappointed that, despite our best efforts, you have thus far been unwilling to meaningfully participate in such discussions.”

One thing I never noticed about Cadence’s letter before – it began, “Dear Wally” – not “Dear Dr. Rhines“, or something similarly respectful… at least Virage addressed its letter “Dear Sirs“.

The news of this bid has been spread much wider and faster than I thought, in press-release land, but it will most likely get less heated discussion than the ill-fated Cadence-Mentor pairing (you know, “Cadentor“).  It signals further consolidation in the EDA/IP industry.  Can I name it?  VirLoVision?

VIRL shares dropped 5% while LGVN shares surged 65% on the news… what does that say?  What do you think?