The New York Times reports people close to the buyout negotiations between Cadence Design Systems and two private equity firms (the Blackstone Group and KKR) say the talks have stalled over price. Although the talks may resume, they are reportedly suspended for now. The Times notes private equity has historically shunned the tech sector due to its volatility and R&D requirements. The recent run-up in Cadence's shares (following a Times report of talks with Blackstone and KKR) may also pose a problem for return on investment, in addition to the rising interest rates of late, which makes it more difficult to finance a deal. Cadence had a market capitalization of $6.49 billion based on its Friday close of $23.30. Its shares have lost 4% after gaining 6% to $24.22 ($24.90 intra-day) reaching a 52-week high on June 4th, when the Times reported of talks with the private equity groups.
Sources: New York Times
Commentary: Private Equity to Buy Cadence Design Systems? • Cadence Design Negotiates With Buyout Firms -- NYT
Stocks/ETFs to watch: Cadence Design Systems (CDNS), Intel Corp. (INTC). Competitors: Magma Design Automation Inc. (LAVA), Mentor Graphics Corp. (MENT), Synopsys Inc. (SNPS). ETFs: PowerShares Dynamic Software (PSJ)
Conference call transcripts: Cadence Design Systems Q1 2007, Synopsys F2Q07
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