Avadel Pharmaceuticals (AVDL) suddenly has options. On Friday, the company received an unsolicited buyout proposal from H. Lundbeck A/S offering up to $23.00 per share, complicating its existing agreement with Alkermes (ALKS).

Here's how Lundbeck structured its offer: $21 per share in cash upfront, plus a non-transferable contingent value right that could deliver another $2 per share down the road. That's notably better than what Avadel agreed to back in October.

The original Alkermes deal valued Avadel at approximately $2.1 billion, offering up to $20 per share. That breaks down as $18.50 in immediate cash, with an additional $1.50 contingent on FDA approval of Lumryz for idiopathic hypersomnia in adults by the end of 2028.

Now Avadel's board finds itself in an interesting position. After consulting with financial and legal advisors, the directors determined in good faith that Lundbeck's proposal would reasonably be expected to constitute a "Company Superior Proposal" under the terms of the existing Alkermes transaction agreement.

That's corporate speak for: this might actually be better, and we're allowed to look into it. Under the Alkermes agreement, this determination gives Avadel permission to share information with Lundbeck and engage in negotiations. But there are limits. The company cannot terminate its agreement with Alkermes or execute any deal with Lundbeck without following specific procedures outlined in the original merger agreement.

Importantly, the board hasn't concluded that Lundbeck's offer is definitively superior, and it hasn't withdrawn its recommendation supporting the Alkermes acquisition. They're essentially saying: this looks promising enough to explore further, but we're not abandoning our current plan yet.

Investors clearly like having multiple suitors. Avadel shares surged 20.22% to $23.13 on Friday, reaching a new 52-week high as the market priced in the possibility of a bidding war or at least a sweetened offer from one of the parties.