There is nothing like a good hostile takeover drama to spice up an otherwise moribund stock market.

On Monday, despite trying to project different intentions last week, pharma giant Bristol-Myers Squibb (NYSE:BMY) raised its bid for ImClone Systems (NASDAQ:IMCL).

Not wasting much time to mull things over, ImClone’s board of directors, headed by Carl Icahn, promptly shot down Bristol's new $62-a-share offer after Bristol-Myers announced plans to takes this higher bid directly to shareholders via a hostile takeover attempt. In rejecting the latest bid, on top of rejecting its first $60-a-share takeover offer, Icahn called the new bid "absurd." Hellooo! Remember Company X and its $70-a-share non-binding proposal?

Icahn will get his opportunity to prove Bristol-Myers’s offer is too low very soon, though. The mystery pharma that might have made the competing $70-a-share proposal is supposed to complete its due diligence on Sunday. If everything is OK, then a formal offer of some sort from this unidentified rival that shareholders can scrutinize should be on the table shortly thereafter -- if one is being put together.

Whenever Carl Icahn gets involved in takeover battles, things tend to get very interesting, as investors in Yahoo! or Biogen Idec (NASDAQ:BIIB) can attest to. So can investors in Mylan (NYSE:MYL) and King Pharmaceuticals (NYSE:KG) in earlier years. ImClone's shares are already trading above Bristol’s $62-a-share offer, which suggests that investors believe another higher offer from somewhere will be coming in.

While takeover situations can change rapidly, there are some curious issues with both Icahn's and Bristol-Myers' recent maneuverings. On one hand, if Bristol-Myers didn’t think a higher bid was coming in, it’s a bit strange for it to get in a bidding war with itself and raise its offer for ImClone right now. Shades of Boston Scientific's (NYSE:BSX) and Johnson  & Johnson's (NYSE:JNJ) bidding war over Guidant a few years ago.

On the other hand, Icahn has a history of trying to puff up buyout offers by announcing competing proposals that sometimes don't materialize into firm offers, like he did with Biogen Idec last year. When he first announced that a rival $70-a-share non-binding proposal was made for ImClone on Sept. 10, for instance, he stated that the mystery pharmaceutical bidder would be allowed "a two week period" to complete its due diligence of ImClone, subject to extension. Now the due diligence won't be completed until Sept. 28, so it appears clear that nothing is as settled or firm with Company X's proposal as Icahn is making it out to be.

In my opinion, Bristol-Myers played it smart by slightly raising its offer while giving Company X little leverage to negotiate its proposal downward. It might even spook Company X into walking away.

How you as an investor play the ImClone takeover situation completely depends on whether or not you feel this competing $70 a share proposal will become a firm offer. However, plenty of biotech investors have been burned betting on acquisitions that don’t materialize at bids they expected. So tread carefully.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has an A+ disclosure policy.