Applied Magnetic’s Bid May Be in Jeopardy
Applied Magnetics Corp.'s stock fell 16%, further cutting the value of its offer for rival Read-Rite Corp. and placing the bid in jeopardy, analysts said. Applied Magnetics shares fell $7.25 to close at $38 on the New York Stock Exchange. Based on Thursday’s share price, its offer for Read-Rite is worth $1.22 billion, $580 million less than when the offer was made Monday. Analysts questioned whether Goleta-based Applied Magnetics will go through with the bid, now worth $25.80 a share. Read-Rite shares lost $3.375 to close at $29.75 on Nasdaq. In announcing the offer Monday, Applied Magnetics valued it at $37.50 a share, based on Friday’s closing price. Its shares have fallen 31% since making the bid for Read-Rite. Milpitas-based Read-Rite had sales of $991 million last year compared with about $345 million for Applied Magnetics. The companies compete in the market for disk drive heads. A Read-Rite spokesman declined to comment on whether his company would ask for a sweeter deal, saying its board will meet today to evaluate the proposal.