Cadence to acquire Simplex in $300M stock-swap

San Jose, CA – Cadence Design Systems Inc. a supplier of electronic design products and services, has signed a definitive merger agreement to acquire Simplex Solutions Inc., a Sunnyvale, CA-based company that provides software and services for the design and verification of ICs, in a deal worth about $300 million.

Under the terms of the agreement, Cadence will acquire Simplex in a tax-free, stock-for-stock merger with an equity value of approximately $18 per share of Simplex common stock, at the time of announcement. The acquisition is expected to be completed in the third quarter of 2002.

As semiconductor process geometries move to 0.13-micron and below, deep-submicron (DSM) physics create new challenges for the semiconductor industry that require a new generation of design technology solutions. To be successful at these smaller geometries, designers need tools that can easily interoperate, support hierarchical design methods and rapid prototyping, and that take into account critical DSM effects such as signal integrity, voltage (IR) drop, electromigration and substrate noise.

As a leading innovator in the area of DSM system-on-a-chip (SoC) verification solutions, Simplex will provide Cadence with complementary best-in-class technology for 3D parasitic extraction and full-chip power-grid planning, electromigration and signal integrity solutions. Simplex also brings a fast-growing, leading-edge design services capability that specializes in high-performance, multi-million-gate digital designs to complement Cadence’s strengths in leading-edge analog and mixed-signal design. Simplex will also provide Cadence with an exciting opportunity to improve supply chain relationships through the X Initiative, and design performance, power, cost and yield through the X Architecture interconnect technology.

Once the merger is completed, the Simplex leadership team will play key roles in Cadence’s future. Simplex CEO Penny Herscher will become exec. VP and chief marketing officer responsible for marketing, strategy, Tality and the Simplex SoC Design Foundry, reporting to Ray Bingham. Aki Fujimura, Simplex president and COO, will become corporate vice president and general manager of the Design for Manufacturability business unit, reporting to Lavi Lev, executive vice president and general manager of the IC business unit. Steve Teig, Simplex chief technology officer, will become the Cadence chief scientist and will join the office of the CTO, reporting to Ray Bingham.

Upon closing of the merger, Simplex stockholders will receive in exchange for each outstanding share of Simplex stock held by them between 0.924 and 0.756 shares of Cadence common stock, depending on the price of Cadence common stock prior to the closing.

The merger of Cadence and Simplex is subject to certain conditions, including compliance with applicable regulatory requirements and the approval by Simplex’s stockholders. As a result of the merger, Simplex will become a wholly owned subsidiary of Cadence.

In connection with the merger agreement, Simplex has issued to Cadence an option to purchase 19.9% of the outstanding shares of Simplex stock for $18 per share. The option will become exercisable under certain circumstances.


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