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Mentor Graphics Corp. Message Board

  • sam13aa sam13aa Apr 1, 2011 10:27 AM Flag

    Who to believe?

    I am not sure who to believe. I heard the convertible notes are priced at 20.54. If that is correct and the rate is more attractive than Icahn's offer, then since I'm holding at a cost of 14 that seems okay to me. But if the market is willing to take these notes at that price, and at the same time Icahn bids 17, why is this thing trading at below 15?

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    • Many companies use these kind of notes to raise cash. The benefit to the purchaser is a guaranteed rate of interest with the upside of some capital appreciation in the future should the stock price exceed the future set price. For MENT, the benefit is a lower interest rate. The future dilution possibility of these notes has already been baked into the share price as there was a drop in price on the day they announced, even though the market was up. Can't say I appreciated that.

      The market has obviously decided that Icahn's $17 offer is worthless (in fact, the market decided this even before MENT rejected his offer). If Icahn were serious, why wouldn't he come back with a higher bid? He himself said he was hoping that others would come in with higher bids.

      Look, Icahn talks about shareholder interests - this is code for Icahn interests. He's into MENT with 15% of the stock. He needs an exit strategy to get his money back with profit, and he isn't going to do that by selling his stock on the open market, except over a long time period. I suspect he's miscalculated on this one (again) but who knows - perhaps there is someone out there who would pay >$20 because that's what it's going to take.

 
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