Mentor cements Anacad analog/mixed-signal bid

Electronic News, Sept 26, 1994 by Jeff Dorsch

WILSONVILLE, ORE.--Mentor Graphics last week agreed to acquire Anacad Electrical Engineering Software, a German firm specializing in analog and mixed-signal design software. Observers said the acquisition will cement the aid which Anacad extended to Mentor during recent years in strengthening Mentor's offerings for analog and mixed-signal simulation, optimization, modeling, design centering and signal integrity analysis.

The deal is expected to close within 30 days. Anacad is said to be profitable and had 1993 revenues of about $7.5 million. Financial terms were undisclosed, but Ron Collett, president of analyst/research house Collett International, estimated the purchase price at between $10 million and $14 million. Other observers, noting that electronic design automation acquisitions often go for 3x to 4x revenues, speculated the price may be in the $20 million to $30 million range.

Anacad and Mentor have been tying their software together for three years or more, and last year the companies signed an OEM and technology exchange agreement allowing Mentor to resell Anacad's software in the U.S. (EN, March 8, 1993). Within weeks of that agreement, the relationship received a test when Analogy, another competitor in the small but growing field of analog design software, filed a patent infringement suit against Anacad and named Mentor as a co-defendant (EN, March 29, 1993).

Mentor pressed ahead with its plans to resell Anacad software, and the two companies have integrated their respective products over the last 18 months. Most recently, Mentor began shipping Anacad's HDL-A mixed-signal behavioral language as an option to its AccuSim II analog simulator and Continuum board and ASIC mixed-signal simulator. The Analogy suit was settled last spring, with the parties agreeing to cross-license each other (EN, Design Software, May 30).

Mitch Weaver, director of engineering for the Mentor Graphics Technology division, said the acquisition is being structured so Anacad can "retain an independent spirit," albeit as a wholly-owned subsidiary. Anacad will maintain its headquarters in Ulm, and will keep its own sales force. Anacad also has offices in San Jose, Calif.; Grenoble, France; London and Tokyo.

"The guiding principles of this acquisition are not new to Viewlogic and others," Mr. Weaver said. "It is new for Mentor. We think it is the right model." In the past, Mentor has folded Silicon Compiler Systems and other acquisitions into its divisional structure.

Mentor and Anacad have had a fairly close relationship," said Kevin Walsh, VP and U.S. general manager of Anacad. "There's been a lot of technology exchanges between the companies." Being a subsidiary of Mentor would make these exchanges "easier to accomplish," he added.

Mr. Collett, meanwhile, said the acquisition is "a very good deal for both parties. It clearly strengthens Mentor's position in the overall analog and mixed-signal market." The combination will bring them "closer to key customers doing analog design," he added.

Anacad's identity as a European company also brings benefits to the arrangement, according to Mr. Collett. "Geographically, they are closer to much of the analog work being done in Europe."

Christhof Sziegoleit, EDA manager at Daimler-Benz, said: "We believe the partnership between Anacad and Mentor Graphics Corp. will provide the multi-level analog and mixed-signal technology we need to achieve first-pass design success required by the demanding automotive and telecommunications markets. We've had strong relationships with both Mentor Graphics and Anacad in the past, and look forward to an even closer cooperation for the future. Our common project with Anacad and Mentor Graphics to build an analog and mixed-signal simulation environment is a success."

James Solomon, senior VP and chief technical officer of Cadence Design Systems' IC Group, sees a positive development for the analog and mixed-signal design arena in the acquisition, although it means Mentor is now a stronger No. 2 in that market to Cadence's leadership position. "We like to see more players in the analog and mixed-signal standards area."

In years past, many in the industry thought Mentor would acquire Analogy, which is also based in Oregon, according to Mr. Solomon. "Mentor and Analogy have a lot of common customers," he said. With the Analogy patent suit closely following the Mentor-Anacad agreement last year, Mr. Solomon saw a subtext of failed expectations behind the litigation.

"Internally, Mentor ramped down analog, essentially believing that wasn't important," Mr. Solomon said. "Mentor lost one of their internal analog simulation champions when Ed Chang left a year ago. They cranked (analog) back up in the form of Anacad."

Doug Johnson, VP of marketing and sales at Analogy, said the Mentor-Anacad deal was "inevitable--Mentor had to do it, to stay in the analog game." Analogy's relationship with Mentor suffered after Mentor began selling Anacad software, because Mentor's sales force had a financial incentive to sell the German company's products and less of an incentive to push Analogy products, he said.