The world's largest maker of programs for creating computer chips, Cadence Design Systems Inc says it has abandoned its $1.6-billion bid for Mentor Graphics Corp.It also said that its board had has expanded the company's share repurchase programmes by up to an additional $500 million, taking the repurchase authorisation to $912 million.

It said in a statement, ''Our goal in pursuing a combination of Cadence and Mentor Graphics was to create a company that would offer customers a broader and more fully integrated product and technology portfolio in a timeframe that would better enable them to address urgent and complex challenges associated with their next-generation product development.

Cadence said  Mentor Graphics' board and management were unwilling to engage in substantive discussions "on what we believe would have been a compelling opportunity" to create significant value for both companies' shareholders and customers. 

''Cadence is a disciplined buyer and will only pursue transactions that make sound financial sense for our shareholders. Mentor Graphics' failure to engage in substantive discussions on our all-cash premium proposal prevented us from confirming for our financing sources the significant synergies associated with this transaction.

It also said that its revised outlook and the present economic climate led it to to conclude that financing terms for the transaction were no longer attractive for. "We remain focused on executing our strategy of delivering holistic solutions that address our customers' key challenges, while ensuring that Cadence operates in the most cost-efficient manner.''

Mentor graphics said in a statement that Cadence's withdrawal of the offer was inconsistent' with its public statements and talks between the two sides.

According to mentor Cadence faced challenges in getting financing for the deal and received multiple requests from regulators for information about the bid, suggesting a review would take a long time, Wilsonville, Oregon-based Mentor said.