Bristol-Myers Squibb Co. (BMY) agreed to pay about $2.5 billion in cash to buy Inhibitex Inc. (INHX), the second maker of hepatitis C drugs to be acquired within two months as companies jockey for position in a developing $20 billion market.
Inhibitex, based in Alpharetta, Georgia, said it will recommend that its shareholders accept Bristol's offer of $26 per share, the companies said in a statement yesterday. That’s more than double its $9.87 closing price on Jan. 6.
The stock this morning is trading at $24.90 in the premarket.
The problem is that over the couple of weeks before the deal was announced, starting around the 15th of December, someone was buying the hell out of the January $10, $12.50 and $15 calls.
Needless to say these $10 calls are worth almost $15 each this morning, where they cost a couple of bucks or less. And with the stick trading under $10, and two weeks to expiry, had there been no inside information (that is, no deal) the calls would have likely been worth zero -- that is, very unlikely to have been worth anything.
You don't think someone might have been tipped off, do you?
