Photon Dynamics: Partial Recovery, Partial Explanation

There’s still something not yet clear about the weird selloff yesterday in shares of Photon Dynamics (PHTN).

To review: PHTN holders on Friday approved a pending $15.60 a share cash takeover of the company by Orbotech (ORBK), an Israeli-based rival in the LCD display equipment business. But the stock yesterday hit an air pocket, dropping $2.19, or 14.5 percent, to $12.89, and trading as low as $10.74. I theorized that the drop might have had something to do with the role in the deal played by Lehman Bros., which has been an adviser to Orbotech. Late in the day, the company issued a release which said that the only hurdle left to completion of the deal is approval of the transaction by the Committee on Foreign Investment in the United States. Photon said CFIUS is supposed to respond by Sept. 29, and possibly sooner.

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