Take Long View

What: Shares of Relypsa (NASDAQ:RLYP) exploded more than 30% higher as of 3:30 p.m. today after a rumor broke that Merck (NYSE:MRK) has plans to make an offer to buy out the company.

So what: According to "a source claiming to have direct knowledge of the situation," pharma giant Merck is planning on making a non-binding offer to acquire Relypsa. While this is still just a rumor, investors are clearly excited about the potential of a deal, and are bidding up shares of Relpysa sharply. Shares of Merck are also moving higher today.

I want to emphasize at this point that this is just a rumor, as a representative from Relypsa declined to comment on the situation. Merck also declined to comment, and neither company has issued a press release on the situation.

Now what: Relypsa's investors have been on quite a wild ride during the past few weeks. In October, the company saw its stock plunge 36% in a single day after it announced that its hyperkalemia drug, Veltassa, had gained FDA approval -- but it came with a restrictive black-box warning. Shares rebounded strongly over the coming days, and spiked higher after news broke that AstraZeneca had made a $2.7 billion buyout offer for ZS Pharma, a company with a late-stage compound that will compete directly with Veltassa if it gains FDA approval.

With Relypsa's market cap hovering below the $1 billion mark at the time, rumors began to emerge that Relypsa could be up next to receive an offer. Those rumors appear to have picked up steam in recent weeks, leading to today's huge move.

Without much information to go on at this point, it's probably best that investors in Relypsa enjoy today's huge move and hold on tight, as the next few trading days are likely to be bumpy.

Brian Feroldi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.