Applied Magnetics Corp. sent an open letter to its shareholders to explain its $1.31-billion hostile takeover offer for larger rival Read-Rite Corp. In the letter, Chief Executive Craig Crisman said the Goleta company became convinced a merger would benefit both companies and that Applied made its bid only after Milpitas-based Read-Rite declined other transactions. Read-Rite's board has rejected the proposal and adopted a "poison pill" plan to thwart it and any other hostile bids. Last week, Applied said it won't raise its offer. Both companies make recording heads that read the data on computer disk drives. Read-Rite is the larger of the two, with revenue of $991 million in its most recent fiscal year, compared with $345 million for Applied. Shares of Applied were unchanged at $40.875 on the New York Stock Exchange. Its shares have fallen 22% since Feb. 24, when the bid was made, dropping the value of its offer from $1.69 billion to $1.31 billion. The proposal of 0.679 Applied share for every Read-Rite share now values Read-Rite at $27.75 a share, down from $36 when the offer was made. Read-Rite shares fell 87.5 cents to close at $29 on Nasdaq.