Mentor Graphics Corp said a takeover proposal by its biggest shareholder Carl Icahn undervalues the company, and this is not the time to put the chip-design software maker up for sale.

Billionaire investor Icahn had, in February, offered $1.73 billion for Mentor Graphics Corp, and predicted the $17 per share proposal would flush out higher bids for Mentor.

Icahn, who has a 14.35 percent stake in Mentor Graphics, was not immediately available to comment.

Our share price has grown by more than 70 percent over the last year, for a two-year aggregate growth of approximately 200 percent, significantly outperforming our peer group and the market, Chief Executive Walden Rhines said in a statement on Monday.

Wilsonville, Oregon-based Mentor's shares have risen 10 percent since February8, when Icahn said the company should be put up for sale. They have risen 86 percent in the last one year.

Mentor had earlier this month urged its shareholders to reject Carl Icahn's nominees to its board.

The company said Icahn's proposal that Mentor put itself up for sale to a strategic buyer entails significant commercial and regulatory risk.

Mentor said its rivals Synopsis and Cadence Design Systems could be logical strategic buyers, but any talk on a combination with them entail risks to growth and stability of customer base.

It said the board remains open to proposals from third parties.

Goldman, Sachs & Co is advising Mentor Graphics.

Mentor's shares were up a percent at $15.27 on Monday on Nasdaq.

(Reporting by Swati Chitnis in Bangalore; Editing by Prem Udayabhanu)