New York – McData Corp. shares are trading at a discount to Brocade Communications Inc.’s takeover offer, reflecting concern that the deal may be blocked by regulators.
The shares are 7.3 percent below the offer price of 0.75 of a Brocade share for each McData share.The purchase has yet to receive approval from the Federal Trade Commission, which last month asked for more information on the deal to form a storage-switch maker with more than 70 percent of the market. There may be “a lingering sense of speculation” related to the regulatory review, said Aaron Rakers, an analyst at St. Louis-based A.G. Edwards & Sons Inc., who has a “hold” rating on both stocks and doesn’t own them. “My feeling is right now that the deal goes through.”
Brocade, based in San Jose, Calif., agreed to buy Broomfield-based McData in August for $713 million, extending its share to about 73 percent of the fiber-channel switch market, according to researcher Dell’Oro Group.
