Bristol-Myers Squibb (NYSE:BMY) has agreed to pay $5.3 billion to acquire Amylin Pharmaceuticals (AMLN), a maker of diabetes therapies, as it seeks to supplement revenue from its top-selling blood thinner Plavix that went off patent in May of this year.
Bristol-Myers will pay $31 a share cash according to a statement from the companies. As part of the deal, AstraZeneca Plc (NYSE:AZN) will pay Bristol-Myers $3.4 billion to enter into a partnership to develop Amylin's drug portfolio. Also part of the deal, Bristol-Myers will assume debt and will make a payment to buy out Amylin's former partner, Eli Lilly & Company (NYSE:LLY).
Amylin rejected Bristol-Myers prior offer of $22 a share earlier this year in February.
There has been some buzz that the company may lift its bid to $15, up from the current $13 bid. I believe the buzz is likely correct, and GSK will eventually end up acquiring HGSI for at least $15 a share. GSK keeps coming back to the table after suggesting that $13 was as high as the company wishes to offer.
Obagi Medical Products, Inc. (NASDAQ:OMPI) Shares closed yesterday's trading at $15.12, down $0.15 after making a fresh 52 week high of $16 on heavy volume. Obagi had a lot of short interest yesterday, with 198,539 shares sold short out of the 388,603 actual shares traded according to Finra.org.
This suggests to me that a buyout is just about certain. The possible acquiring company might want to keep the Obagi pps at a certain range. There is no reason for retail shorts to be shorting that many shares with strong circumstantial evidence of an acquisition on the table. You should see a similar pattern of trading that occurred in similar past hostile scenarios. For instance on Apr. 18, 2012, HGSI was trading around $7.70 a share, with around 23% of the float shorted. Let's take a look:
The actual shares traded of HGSI that day was 888,502, with 463,782 shares shorted. The next day the stock gaped up to around $15 a share on news of an offer from GSK to acquire the company for around 13 a share.
I encourage those reading this to investigate prior acquisitions, especially looking at hostile takeovers, as this might be a very good opportunity for investors/traders to take advantage of.
Disclosure: I am long OMPI.
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