The discount that Valeant Pharmaceuticals looked likely to claim on its proposed buyout of specialty pharma company Obagi Medical Products is getting smaller by the day.

In March, Valeant made an initial bid of $19.75 per share for Obagi, a price only 2.9 times the value of Obagi’s annual revenues. Yesterday, German rival Merz Pharma trumped that offer with a $22-per-share bid of its own.

Today, Valeant responded in kind, increasing its bid to $24 cash per share. But investors seem to expect this bidding war to continue, and the price to continue to rise. As of this writing, Obagi shares are up 10% in Wednesday trading, and their new share price — $25.15 — perhaps indicates we can expect a new bid from Merz in fairly short order.

The Obagi board supports the latest Valeant offer.

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The article Valeant Ups Bid for Obagi to $24 per Share originally appeared on Fool.com.

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