CV Therapeutics Takes Off Right Out of Gate On Takeover Talk

The CV Therapeutics Inc. (CVTX) story just keeps getting better and better… that is if you remain long the stock. Shares are jumping higher right out of the gate, now up by $1.13, or 9.03% to $13.65 on very heavy volume early on of 1.1 million shares.

Today’s surge comes after a Financial Times article published today echoed what we had written yesterday: that CV Therapeutics had come under pressure from a well-known activist investor, Daniel Loeb of Third Point LLC, which last month acquired nearly a 10% stake in the company. The article goes on to be even more specific in mentioning a few names that could make an offer between $1 to $1.2 billion is possible which would set the price of the bid for the common stock between $18 to $20 per share. The author cited an anonymous investor who believes the company has been gearing up for a sale the past few months and believes the CEO would take a $20 offer in a “heartbeat.” After all, who wouldn’t want to make some fast money and accept an offer that is nearly double the recent share price?

At this point, the takeover talk probably isn’t just a good old fashioned water cooler rumor and should be considered credible. That is why you’ll probably see the shorts continue to cover and in a big way. There are currently 21.37 million shares sold short, about 36% of the company’s publicly traded float of 51.44 million shares, just way too much to have when betting against a potential takeover play.

CVTX 1-yr chart: