SAN JOSE, Calif. -- Two software firms -- Cadence Design Systems Inc. and Valid Logic Systems Inc. -- said Wednesday they have agreed to a stock-swap merger with a value of about $198 million.
The merger, expected to be completed by December, will produce a company with combined 1990s revenue of $390 million and about 2,600 employees worldwide.
Cadence Design will be the surviving company.
The two companies produce electronic design automation software, with Cadence specializing in microchip products and Valid targeting systems products.
'Once we started to evaluate the potential of the merger, the combination of our two companies and their respective technologies seemed natural,' said Joseph B. Costello, who will continue in his current position as president and chief executive officer of Cadence.
'Our product philosophies and business models are compatible, and our technology strengths are complementary across the board,' Costello said.
Under the terms of the definitive agreement, Valid will merge into Cadence in a pooling of interests transaction. Cadence will issue 11.4 million shares of its common stock in exchange for all outstanding shares of Valid common and all outstanding convertible preferred stock.
The exchange ratio in the deal, announced after the stock market closed, will be .323 shares of Cadence stock for each share of Valid common stock. Cadence's stock closed down 37.5 cents at $17.375 a share Wednesday on the New York Stock Exchange, while Valid's was unchanged at $4.25 a share in over the counter trading.
W. Douglas Hajjar, currently chairman and chief executive officer at Valid, will become vice chairman and L. George Klaus, president and chief operating officer at Valid, will become chief operating officer for the company.