News and New Products

Mentor Graphics acquires Sierra DA for $90M

By Michael Santarini, Senior Editor -- EDN, 6/11/2007

The EDA landscape is going to get a bit more interesting, as this morning Mentor Graphics officially announced that it has acquired RTL-to-GDSII vendor Sierra Design Automation for $90 million.

Over the years, Mentor Graphics had taken criticism from industry watchers for playing in just about every EDA market segment except the digital IC implementation tools market, traditionally the most lucrative EDA market segment. A few years ago, John Cooley dubbed Mentor “the donut” company for the hole in its product line up. Then last year, Mentor announced a partnership with RTL-to-GDSII vendor Sierra Design Automation, kicking off speculation that the relationship could lead to an acquisition.

Then last month, rumors started to fly that an acquisition was imminent. Last Friday, Mentor announced it was going to hold a press conference before Nasdaq opened on Monday, June 11. Today it’s a done deal.

The acquisition will bring to Mentor Sierra’s formidable Pinnacal suite, which includes physical synthsesis, floorplanning and place and route technology to compliment the company’s flagship Calibre DRC/LVS tools.

Indeed, Mentor and Sierra officials on a call announcing the acquisition this morning said the companies plan to leverage the Calibre’s penetration in the DRC/LVS and DFM markets and the need for correlation between implementation tools and manufacturing to accelerated Sierra’s adoption in the implementation tools market.

As a 60 plus person startup, Sierra had already broken into large accounts including AMD, ATI, ST Microelectronics and NEC. In 2006, the company had revenue of $20 million.

“This gives us a complete platform at the back end that we can do design for manufacturing, analysis all the way back to implementation to the physical layout,” said Mentor Chairman and CEO Wally Rhines. “It’s a big step for Mentor but it has enormous potential. It takes us into the largest single market in EDA, but it does it in a way where we have an isolated that we can start with a number one position [with Calibre DRC] and grow it, rather than just being another place and route tool."

Rhines said that Mentor believes that with the Sierra acquisition, the company will not have to purchase any smaller tools.

Sierra’s 67 employees are all expected to make the move to Mentor.

The deal is closed.