EX-99.(A)(5)(D) 3 f77751a6ex99-a5d.txt EXHIBIT 99.(A)(5)(D) Ex-99.(A)(5)(D) FOR IMMEDIATE RELEASE MENTOR GRAPHICS DELIVERS MERGER AGREEMENT TO IKOS SYSTEMS AGREEMENT WOULD PROVIDE SUPERIOR VALUE TO IKOS STOCKHOLDERS PROMPTLY WILSONVILLE, OR - January 16, 2002 - Mentor Graphics Corporation (Nasdaq: MENT) today announced that it has delivered to IKOS Systems, Inc. (Nasdaq: IKOS) a merger agreement that provides for prompt consummation of a transaction between the two companies. Mentor Graphics has executed the merger agreement and is committed not to revoke the merger agreement before January 31, 2002. The Mentor agreement provides for the prompt consummation of Mentor Graphics' tender offer for IKOS shares at $11.00 per share in cash and a second-step merger for any remaining shares at the same cash price. "The IKOS board of directors has already determined that Mentor's offer is superior to the Synopsys transaction, and now we have delivered a merger agreement that also is clearly superior," said Walden C. Rhines, Chairman and Chief Executive Officer of Mentor Graphics. "We expect the IKOS board to follow the procedures detailed in the Synopsys merger agreement by terminating that agreement, paying the break-up fee to Synopsys and executing the Mentor agreement. At that point, our acquisition will be consummated very quickly, and IKOS stockholders will receive their $11.00 per share in cash promptly." The Mentor agreement contains significant improvements over IKOS' agreement with Synopsys, including: - $11.00 per share in cash to IKOS stockholders promptly after execution of the Mentor agreement, compared to a highly conditional transaction with Synopsys at an unknown price that will not close until late summer; - reduced restrictions on IKOS in running its business pending the closing of the Mentor agreement; - a significant reduction in the conditions to the closing of the Mentor transaction compared to the Synopsys agreement; and - a significantly reduced break-up fee despite the fact that the price per share is significantly higher than the anticipated price of the Synopsys transaction. "IKOS can execute our merger agreement without entering into discussions or negotiations, and without even providing confidential information to Mentor Graphics," said Dr. Rhines. "I look forward to closing this transaction quickly and delivering $11.00 per share in cash to IKOS stockholders as soon as possible." The full text of the cover letter that accompanied the Mentor merger agreement follows: [LATHAM & WATKINS LETTERHEAD] January 16, 2002 By Hand Delivery Ms. Diane Holt Frankle Gray Cary Ware & Freidenrich LLP 400 Hamilton Avenue Palo Alto, California 94301-1833 Re: Mentor Graphics Corporation Offer to Purchase All Outstanding Shares of IKOS Systems, Inc. Common Stock Dear Diane: On behalf of Mentor Graphics Corporation ("Mentor Graphics"), I am pleased to enclose an Agreement and Plan of Merger and Reorganization (the "Mentor Agreement") by and among Mentor Graphics, Fresno Corporation ("Fresno") and IKOS Systems, Inc. ("IKOS"). The Mentor Agreement contemplates a continuation of Mentor Graphics' tender offer for IKOS shares at a price of $11.00 per share in cash and a follow-on merger that cashes out any remaining shares at the same price. The Mentor Agreement has been executed by Mentor Graphics and Fresno. Mentor Graphics and Fresno hereby commit that their execution of the Mentor Agreement will not be revoked by Mentor Graphics or Fresno prior to Thursday, January 31, 2002. This provides IKOS with ample time to consider the Mentor Agreement and to comply with applicable provisions of its merger agreement (the "Synopsys Agreement") with Synopsys, Inc. ("Synopsys"). I have also enclosed a copy of the Mentor Agreement marked to reflect changes from the Synopsys Agreement that was previously executed by IKOS. You will note that the changes constitute significant improvements from the perspective of IKOS and its stockholders. The improvements include: - $11.00 per share in cash to IKOS stockholders promptly after execution of the Mentor Agreement by IKOS compared to a highly conditional transaction with Synopsys at an unknown price that will not close until late summer; LATHAM & WATKINS Ms. Diane Holt Frankle January 16, 2002 Page 2 - reduced restrictions on IKOS in running its business pending the closing of the Mentor Agreement; - a significantly reduced number of closing conditions in the Mentor Agreement as compared to the Synopsys Agreement; and - a significantly reduced break-up fee despite the fact that the price per share is significantly higher than the anticipated price of the Synopsys transaction. As you know, the Board of Directors of IKOS has already determined that Mentor Graphics' $11.00 per share cash tender offer constitutes a Superior Proposal under the Synopsys Agreement. Mentor Graphics has now also presented IKOS with a merger agreement that is superior to the Synopsys Agreement from the perspective of IKOS and its stockholders. Execution of the Mentor Agreement by IKOS does not require any discussion or negotiation between IKOS and Mentor Graphics or disclosure by IKOS of confidential information to Mentor Graphics. The schedules and exhibits required under the Mentor Agreement will be identical to those that are already a part of the Synopsys Agreement. Since Mentor Graphics and Fresno have already signed the Mentor Agreement, the Mentor Agreement will become binding upon execution by IKOS. Consistent with IKOS' obligations under the Synopsys Agreement, Mentor Graphics expects the Board of Directors of IKOS to determine, under Section 8.1(g) and the applicable provisions of Section 5.2 of the Synopsys Agreement and following consultation with relevant advisors, that the Takeover Proposal (as defined in the Synopsys Agreement) is bona fide, will result in a transaction more favorable to IKOS' stockholders from a financial point of view and must be pursued in order for the Board of Directors to comply with its fiduciary duties to IKOS' stockholders. Mentor Graphics similarly expects IKOS to provide to Synopsys the notification and information required under Section 8.1(g) and the applicable provisions of Section 5.2 of the Synopsys Agreement. Mentor Graphics does not expect IKOS to enter into discussions or negotiations with Mentor Graphics, to disclose to Mentor Graphics nonpublic information concerning IKOS and its subsidiaries, to modify or withdraw its recommendation concerning the Synopsys Agreement, to recommend the Mentor Agreement to its stockholders or to approve the entering into of the Mentor Agreement prior to the termination of the Synopsys Agreement. Upon termination of the Synopsys Agreement, Mentor Graphics expects IKOS immediately to approve entering the Mentor Agreement and to execute the Mentor Agreement. Mentor Graphics expects IKOS to notify Synopsys under Section 8.1(g) of the Synopsys Agreement that IKOS has determined that it desires to approve entering into the Mentor Agreement and provide Synopsys with the required five business day period to present an offer that is at least as favorable to the stockholders of IKOS as the Mentor Agreement. Also LATHAM & WATKINS Ms. Diane Holt Frankle January 16, 2002 Page 3 in accordance with Section 8.1(g) of the Synopsys Agreement, Mentor Graphics expects that IKOS will, following expiration of such five business day period and assuming that the Board of IKOS believes that the Mentor Agreement continues to be a Superior Proposal, pay the fees to Synopsys required under Section 8.3(b) of the Synopsys Agreement, terminate the Synopsys Agreement and execute the Mentor Agreement. As you know, the tender offer and the merger under the Mentor Agreement can be consummated very quickly thereafter. You will note that Mentor Graphics does not expect to have access to IKOS confidential information or to enter into discussions or negotiations concerning the Mentor Agreement prior to execution of that agreement by IKOS. Similarly, Mentor Graphics does not expect IKOS to take any action with respect to its recommendation of the Synopsys Agreement to IKOS stockholders prior to termination of the Synopsys Agreement. You will also note that the Mentor Agreement contains an agreement by Mentor Graphics to maintain the confidentiality of any non-public information provided to Mentor Graphics. For these reasons, Mentor Graphics does not believe that it is either required under the Synopsys Agreement or appropriate under the circumstances for Mentor Graphics to execute the form of confidentiality agreement executed by Synopsys. Mentor Graphics looks forward to execution of the Mentor Agreement by IKOS and prompt consummation of a transaction bringing IKOS stockholders $11.00 per share in cash in the very near future. Very truly yours, /s/ Christopher L. Kaufman -------------------------- Christopher L. Kaufman of LATHAM & WATKINS Enclosures cc: Ramon A. Nunez Pursuant to its all cash tender offer, Mentor Graphics is offering to acquire IKOS Systems for $11.00 per share in cash of IKOS common stock. The offer represents a premium of 37% over the Nasdaq closing price of IKOS stock on December 6, 2001 and a premium of 49.5% over IKOS' closing price on June 29, 2001, the last trading day before IKOS announced its proposed acquisition by Synopsys, Inc. (Nasdaq: SNPS). Furthermore, the offer represents a premium of 87% over the average closing price of IKOS stock for the thirty trading days ended December 6, 2001. In addition, Mentor Graphics' offer is subject to fewer conditions than the Synopsys proposal and can be consummated months earlier than the Synopsys proposal. Mentor Graphics' offer is not subject to any financing condition and is scheduled to expire at 12:00 Midnight, New York City time on Friday, January 25, 2002, unless extended. ABOUT MENTOR GRAPHICS Mentor Graphics Corporation (Nasdaq: MENT) is a world leader in electronic hardware and software design solutions, providing products, consulting services and award-winning support for the world's most successful electronics and semiconductor companies. Established in 1981, Mentor Graphics reported revenues over the last 12 months of more than $600 million and employs approximately 3,000 people worldwide. Corporate headquarters are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon 97070-7777; Silicon Valley headquarters are located at 1001 Ridder Park Drive, San Jose, California 95131-2314. World Wide Web site: www.mentor.com. Mentor Graphics is a registered trademark of Mentor Graphics Corporation. All other company or product names are the registered trademarks or trademarks of their respective owners. # # # CONTACTS Mentor Graphics Corporation The Abernathy MacGregor Group Ryerson Schwark Chuck Burgess Tel: 503-685-1660 Jason Thompson Tel: 212-371-5999