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1,675,325. Read-Rite’s underwriter, Hambrecht & Quist,
announced the purchase price adjustment in its Read-Rite company
report as follows:
The original purchase price for the Conner HSA
operation was $27.5 million in stock at the IPO price
of $11.50. Read-Rite, however, was able to
dramatically lower the inventory levels of its own
heads at the Conner HSA location before the transaction
closed, resulting in a reduction in the actual purchase
price to less than $20 million, and thus fewer shares.
* * * [Emphasis omitted.]
In order to prevent Conner Malaysia from selling its shares
into the market immediately following the IPO, Read-Rite
required Conner Malaysia as part of the deal to agree to
restrictions upon how soon Conner Malaysia could sell the Read-
Rite shares. Specifically, Read-Rite and Conner Malaysia agreed
that the Read-Rite shares that Conner Malaysia was to receive
would be freely tradeable at the closing of the IPO, subject to
a lockup agreement that prevented Conner Malaysia from selling:
(1) Any of the Read-Rite shares for 180 days following the
closing of the IPO; (2) two-thirds of the shares for 270 days
following the closing of the IPO; and (3) one-third of the
shares 1 year following the closing of the IPO.
These restrictions on the sale of the Read-Rite stock were
expressly included in the Asset Purchase Agreement. In order to
prevent Read-Rite from amending the Asset Purchase Agreement to
allow a waiver or release of the sale restrictions, Read-Rite’s
underwriters entered into separate agreements with Read-Rite.
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Last modified: May 25, 2011