Israeli-based Teva Pharmaceuticals (TEVA: sentiment, chart, options) this morning announced plans to purchase its rival, Barr Pharmaceuticals (BRL: sentiment, chart, options), for more than $7 billion. TEVA will also offer to take on $1.5 billion of BRL's debt, while giving BRL shareholders $39.90 in cash and 0.6272 share of a Teva American Depositary Receipt (ADR) for each share they own a total purchasing price of $66.50 per share. Before rumors of the buyout began, Barr shares closed Wednesday at $46.82; on Thursday, BRL ended at $57.17.

TEVA already the largest pharmaceutical firm in the world commented that the acquisition should help expand its presence in U.S. and Central and Eastern Europe. BRL already has a presence in the European markets, after purchasing Croatia-based drugmaker Pliva in 2006.

Right out of the gate, the shares of TEVA have tacked on about $1, or 2.46%, to hover near the $42.05 marker. Meanwhile, BRL hit a new annual high of $62.35 within the first minute of trading.

Ahead of today's news, TEVA's short-term option traders were slightly skewed toward the bullpen, with a Schaeffer's put/call open interest ratio (SOIR) of 0.65 ranking in the 47th annual percentile. Looking at the sentiment among BRL's near-term option speculators, the bullish vibe increased dramatically when rumors of the buyout hit the Street. BRL's SOIR dropped from 0.87 (in the 87th annual percentile) on Wednesday to its current reading of 0.54 (in the 47th annual percentile).