Buyout offer lifts Northstar Neuroscience shares

The largest shareholder of Northstar Neuroscience offered today to acquire the rest of the Seattle-based medical device company for $2.25 a share.

News of the bid sent Northstar stock up 34 cents, or 22.7 percent, to close at $1.84.

The stock has traded between $13.39 and $1.09 in the past 52 weeks, plunging in January after the company announced the failure of a clinical trial evaluating its cortical stimulation to improve hand and arm function in stroke survivors.

Tang Capital Partners of San Diego, which said it owns 18 percent of Northstar, said in a filing with the Securities and Exchange Commission that it has "tried on several occasions to have constructive, confidential discussions with management" regarding a buyout offer. "So far, management has been unwilling to entertain such discussions except under conditions that would make it impossible for us to protect the value of our significant investment in Northstar," it said.

The offer represents a 50 percent premium to the closing price of Northstar's stock on Tuesday. Tang Capital said the proposal is contingent on receiving a positive response by July 9.

The offer values Northstar's 25.9 million shares at approximately $58.2 million. As of March 31, the company reported it had cash and investments of $73 million.