Irvine’s Allergan Inc., a midsize drug maker that’s long been the subject of buyout speculation, has seen a surge in investor bets that it could be a takeover target.
Buyers of Allergan call options,bets that a stock will go up in price, as often is the case in an acquisition,surged Tuesday, according to a Street.com blog by Mike Yamamoto, managing editor of options trading news site OptionsMonster.com.
About 5,000 options to buy Allergan shares for $60 in September traded hands, up from about 100 a day in July.
Allergan’s shares closed at $55.60 Tuesday with a market value of $17 billion.
The traders appear to be speculating that a suitor could make a per-share offer for Allergan well above what the stock is trading at now.
That could allow the options traders to buy Allergan shares at a lower price than what a suitor might offer, letting them profit off the difference.
The speculation isn’t unusual for Allergan.
In May, traders betting on a takeover also bid up Allergan options. At that time, the rumor was that Britain’s GlaxoSmithKline PLC,whose predecessor SmithKline Beecham PLC acquired Allergan in 1980 and later spun off the business,was interested in the company.
There was no chatter about a specific suitor on Tuesday.
In the past, Allergan Chief Executive David Pyott said he couldn’t rule out a sale but said “somebody would have to come out with a very compelling proposition.”
Allergan, which makes wrinkle remover Botox, other medical cosmetic products and eye and skin drugs, is looking for acquisitions of its own, Pyott said at the time.
