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Medarex Holders Shrug at BMS Buyout: Is the Glass 11% Empty or 190% Full?

If you were baffled to learn that Bristol-Myers Squibb had only gotten 8.7 percent of Medarex's shares in its offer to buy the stock for $16 -- a 90 percent premium on its price before the offer -- look no further than this chart:

(Medarex stock 2007 - now.) On the left of the chart is 2007, when Medarex reached a high of around $17.90. On the right is the bump created by the BMS offer, where Medarex is trading at just under $16. While Medarex was trending up, along with the rest of the market, prior to BMS' offer, it certainly wasn't heading toward $17.

Nonetheless, Medarex holders have adopted the belief that a 90 percent gain is not enough, and that BMS will eventually be forced to come back with an even higher offer.

They appear to be adopting the logic of angry shareholder Kenneth Blumberg, who sees the glass as 11 percent empty (the decline since 2007), not 190 percent full (the value of BMS' offer).

Doubtless there are arguments to be made that Medarex's pipeline is so promising that it is worth far more than $16. Still, a 90 percent bounceback after the crash seems like a decent reward, compared to the risk of waiting to see what hurdles the FDA comes up with.

BMS extended its offer until Aug. 26.