Late After-Hours Spike: Teva/Barr (TEVA, BRL)

Posted in after-hours 
July 16th, 2008

We are seeing highly unusual volume trading in Barr Pharmaceuticals Inc. (NYSE: BRL) in late after-hours trading tonight.  The culprit is a report (possible rumor) that Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA) is in talks to buy the US-generic drug maker.

Barr Labs closed up 1.6% today at $46.82, but its market cap at that price is already $5.06 Billion.  Shares popped 15% on more than 172,000 shares as of 7:26 PM EST to $54.11 in late after-hours trading after the report came out.  That gives a new implied market cap of about $5.8 Billion.

We’ve also seen TEVA trade 1.387 million shares after-hours and its last stock trade was down 2.1% at $41.52 (7:26 PM EST).

BRL trades only about 1.8 million shares per day and TEVA trades about 6 million shares per day.  It is hard to tell if today’s elevated options activity in BRL call options gave up any real red flags or not.  We did see the following trades and you can see these are high compared to the open interest:

Call/Strike        Volume  OpInt
JUL08 $45.00     2,195    4,393
JUL08 $50.00     1,320    898
AUG08 $45.00   3,688    8,571
AUG08 $50.00   8,109    3,466
AUG08 $55.00   3,180    1,553
NOV08 $50.00   1,286   1,096

Jon C. Ogg
July 16, 2008

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