TriPath Imaging Inc. (NDAQ:TPTH) was bought out by Becton, Dickinson and Co. (N:BDX) on Monday for $9.25/share in an all-cash transaction. According to the company's 13D filing with the SEC:

"BD has elected to convert its filing on Schedule 13G, filed with the Securities and Exchange Commission (the "SEC") on August 8, 2001, into a filing on this Schedule 13D to reflect its decision on August 14, 2006 to submit to the Issuer's Board of Directors a letter, dated August 14, 2006 (the "Proposal Letter") containing a non-binding proposal to acquire all of the issued and outstanding Common Stock of the Issuer, that BD does not currently own, at a valuation of $9.25 per share in cash in a merger transaction (the "Proposal"). The Proposal also contemplates the payment of such cash consideration to all holders of existing options, stock appreciation rights and warrants granted by the Issuer."

This announcement came as a suprise to many shareholders, as the stock doubled on Monday to its current $8.87 level (still a 4% discount to the buyout price). Most of the suprise was due to the fact that BDX announced this in their initial 13D filing! So, there was no prior evidence that BDX was even remotely interested in TPTH shares before Monday... Under the agreement, the acquisition won't be going through until the first quarter of 2007, which leaves plenty of time for other companies to place a bid. So, TPTH is a great stock to put on the radar incase anything else does come along. Any future bids would likely be tipped off by BDX moving up their deadline or strange price activity.

This acquisition also illustrates a key concept that goes along with trading based on insider ownership - a way to tell if the buyers are interested in acquiring the company. One hint, or tip-off, in this case was the massive insider selling that suddenly stopped shortly before this acquisition. A quick look at their SEC filings shows massive selling via Form 4s before and during June. These sales occurred almost every day like clockwork! Suddenly, on June 2nd, they stopped and never resumed. So, what happened? The law says that insiders are not allowed to buy or sell when they know their company would receive an offer - this would be insider trading. Although the 13D filed was the first indication of a third party interested in acquisition, the suddenly decline in insider selling could have tipped off the fact that something was going on that would benefit the company's shareholders. This is something to watch if you are holding shares in a company that could be a potential acquisition target.