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Activist investor Elliott Management takes 8.1% stake in Mentor Graphics

Source: Elliott Management

Activist hedge fund Elliott Management said it bought 8.1 percent stake in Mentor Graphics, calling on the company to increase shareholder value and pursue "strategic opportunities."

Mentor Graphics is the latest technology firm the hedge fund has targeted, following successful campaigns at Qlik Technologies, Riverbed, Informatica and Compuware, which all sold to private equity firms after Elliott invested.

Elliott said in a filing Thursday it had initiated a dialogue with the board of directors after taking a roughly $200 million stake in the company.

Elliott's broad range of investments across the tech industry are overseen by portfolio manager Jesse Cohn, who also leads its private equity investing arm, Evergreen, based in Menlo Park, California.

In June, it partnered with Francisco Partners to acquire Dell's software assets in a deal worth more than $2 billion that was an offshoot of its campaign against storage company EMC Corp.

Mentor Graphics, based in Wilsonville Oregon and run by Chief Executive Wally Rhines, is no stranger to activist investors or takeover offers. Billionaire activist Carl Icahn won a proxy fight in 2011 that secured him three board seats, although he exited his investments in the company in April after six years.

The company, which sells its software to semiconductor companies that use it to design and test their chips, also fended off a hostile takeover by rival Cadence Design Systems in 2008.

The semiconductor industry which Mentor serves has also been consolidating at a rapid pace. NXP Semiconductors, worth about $24 billion in market value, is in early talks with Qualcomm about a potential merger, sources said Thursday.

Mentor's shares are about flat year-over-year and have recovered since falling more than 30 percent after a disappointing earnings outlook last fall.

The company's shares spiked 6.5 percent to $26.30 in after-market trading on Thursday.

Mentor Graphics shares, which closed Thursday's session at $24.69, should be valued at $29.07, according to StarMine data.