BIDDER REDUCES OFFER FOR NEWHALL COMPANY.

Byline: Dan Hart Bloomberg News

Special Devices Inc. said J.F. Lehman & Co. cut the price it will pay for the world's largest maker of automotive air-bag triggers to about $266 million from its original offer of $296 million.

Special Devices said the price was cut to $34 a share from $37 because of market volatility since the company's special shareholders meeting Sept. 23, but didn't elaborate further. Company officials weren't immediately available for comment.

New York-based J.F. Lehman, a private equity fund, agreed in June to buy Newhall-based Special Devices, which dominates the U.S. market for initiators, the devices that cause air bags to inflate in crashes.

Special Devices shareholders dropped a lawsuit earlier this month in return for more details about financial projections used in the transaction and the compensation being paid to Special Devices executives. The stockholders won't get any additional money for their shares. The company had 7.81 million shares outstanding as of Aug. 31.

Special Devices said the latest change in the terms must be approved by its shareholders before it becomes effective. The company soon will file a new proxy statement containing the change and schedule a new special shareholders meeting with the Securities and Exchange Commission.

Special Devices stock rose 1.75, or about 6 percent, to 31.5 on Wednesday. The shares have fallen 11 percent since the takeover was announced June 22.

Special Devices also makes products used in tactical missiles and in military crew-escape systems.