LOS ANGELES – Financier Carl Icahn (search) on Friday offered to buy the shares of generic drugmaker Mylan Laboratories (MYL) that he does not already own for $4.9 billion, or $20 a share, according to a government filing.
Icahn, Mylan's largest shareholder, has staunchly opposed the company's planned $3.37 billion deal to buy King Pharmaceuticals Inc. (KG).
Icahn said in the filing that he knows of three potential buyers who would have interest in Mylan. The investor, who has a 9.8 percent stake in Mylan, has been leading a proxy fight to derail the Mylan deal with King through his company High River LP.
In a statement, Mylan said Icahn's offer contains factual misrepresentations and lacks detail and commitment. The company said it intends to move forward with the King deal.
News of the offer sent Mylan's shares up $1.72, or 10.02 percent, to $18.88 Friday on the New York Stock Exchange (search), while shares of King were down 5 cents at $11.15.
"It's a good deal for shareholders," Natexis Bleichroeder analyst Timothy Chiang said of the Icahn offer. But he also said the financier is probably looking to turn a profit on his stake in the company.
"If the King deal goes through Mylan shares are going to stay around $17 or even go lower," the analyst said.
Mylan had about 272.9 million diluted shares outstanding as of Sept. 30, which would value the stake Icahn doesn't already hold at $4.93 billion and value the entire company at $5.46 billion.
Icahn said in the filing he is prepared to negotiate an agreement not to wage a proxy fight to unseat Mylan Chief Executive Robert Coury and the existing Mylan board.
Since the King deal was announced in July, investors, including Icahn, have complained of its high price.
The deal hit a major snag last month when King said it would need to review its historical financial results. An earnings restatement would give Mylan the right to call off the acquisition.
Mylan has been eager to buy King's hypertension drug Altace (search) and its sales force, which it hopes to use to tout a new hypertension drug of its own.
Chiang said Mylan is trying to get into the branded drug business, which could provide the company with more of a linear growth trajectory than its lagging generics business.
Icahn in the filing said the recent developments at King have highlighted the risks inherent in the acquisition.
Investors have been building bullish options positions in Mylan. By midday, more than 10,000 calls -- which give the right to buy the stock at a preset price in the future -- had changed hands across the U.S. options exchanges.
"MYL January call options are more active than December call options on the expectations Icahn will raise his bid or another bidder will surface in the January option cycle," said Paul Foster, options strategist at flyonthewall.com.