Vivus Inc's (VVUS.O) biggest shareholder said it was planning to buy the obesity drug maker in a deal valued at $640 million, the latest shareholder attempt to revive a company that has struggled to boost sales of its key drug.
Aspen Investment Fund, which reported a 9.65 percent stake in Vivus on Wednesday, said it expects to submit its non-binding offer to the company by June 13.
The investment fund did not disclose the terms of the offer. Vivus had a market value of about $482 million as of Tuesday's close and debt of about $269 million.
Vivus shares were up 6 percent at $4.97 in midday trading.
The company, which was embroiled in a long-drawn proxy war with shareholder First Manhattan Co last year, has disappointed investors with weak sales of its diet pill Qsymia, which was once touted as a potential blockbuster.
"While an Aspen offer for Vivus in the coming weeks/month could lead to share appreciation in the near term, it is unclear how this would address important strategic and operational issues related to Qsymia's growth longer term," Wells Fargo analyst Matthew Andrews wrote in a note.
The analyst questioned how a possible deal would help Vivus forge a partnership with a large drugmaker and Aspen's plans for increasing Qsymia sales in the second half of 2014 and beyond.
Qsymia was launched in September 2012 - one of the two obesity drugs to be approved in the United States in 13 years - but sales failed to pick up due to reimbursement problems, prior safety concerns with diet drugs and the lack of a large partner.
The company's market value has tumbled since then. The stock, which traded at a high of about $25 in September 2012, has lost more than 80 percent of its value.
Vivus declined to comment on Aspen's planned offer, while Aspen was not immediately available for comment.
In a regulatory filing on Wednesday, Aspen said it planned to engage in discussions with Vivus regarding its board, management, operations and strategic plans, among other matters.
First Manhattan, which owns a 9.10 percent stake in Vivus according to Thomson Reuters data, won its proxy war with the company July last year. It secured a board majority and brought in a new CEO.
However, sales of Qsymia failed to impress even as the company tried to control costs and focused on rolling out the pill via retail pharmacies.
Also, in an unexpected turn of events, the new CEO resigned in September citing health problems. The company is now led by Seth Fischer, a former senior executive at Johnson & Johnson (JNJ.N).
(Reporting by Esha Dey in Bangalore; Editing by Saumyadeb Chakrabarty)