What happened

The news just keeps getting better for shareholders of Cincinnati Bell (CBB).

Last month, the stock surged nearly 35% in a day, after it announced plans to sell itself to Brookfield Infrastructure Partners (BIP -1.45%) for the princely sum of $10.50 per share. Today, Cincinnati Bell stock is marching higher once again on the revelation that an unnamed "infrastructure fund" has proposed to pay even more to acquire the company: $12 a share, cash.  

Hands raised holding auction paddles in a bidding war as a gavel crashes down

Image source: Getty Images.

So what

Cincinnati Bell made its latest announcement just this morning, and its stock is already up another 20.2% as of 11:30 a.m. EST today. Management said that two days ago, "it received a non-binding proposal from an infrastructure fund [not identified by name] to acquire all of the outstanding shares of common stock of Cincinnati Bell for $12.00 per share in cash."

The new offer trumps Brookfield's previous offer by more than 14%, and like Brookfield's offer, is all cash and carries none of the risk of a stock-based acquisition being devalued if the acquirer's own stock price slumps. As such, you'd think this new offer would please Cincinnati Bell's board. But in fact, while management says it has commenced discussions with the fund, it is for the time being still sticking with its "existing recommendation in support of the transaction with Brookfield Infrastructure."

Now what

So why are investors now bidding up the stock past $13 a share if there are no assurances that a deal with the fund will be approved, and if (more to the point) neither Brookfield nor this new mystery bidder has offered to pay anything more than $12?

Clearly, investors are hoping a bidding war will erupt, and Brookfield will raise its offer -- even past $12 a share. Whether they're right about that, or whether the final sales price will ever even exceed $10.50, remains to be seen.