"However, if you continue to refuse to engage in meaningful negotiations, we are prepared to submit our proposal directly to your stockholders," he wrote.

Shares of PharMerica rose $3.22, or 29.5 percent, to $14.15 in afternoon trading, and Omnicare stock climbed $2.39, or 8.9 percent, to $29.26.

Credit Suisse analyst Glen Santangelo said he expects either an increased bid from Omnicare, or an offer from a private equity firm that is interested in PharMerica.

"We believe PharMerica may be interested in finding a financial buyer which would keep the company intact and allow management to retain their current positions," he wrote.

PharMerica operates 94 pharmacies in 44 states, serving nursing centers, hospitals and other long-term care providers. It was formed by the July 2007 spin-off and combination of the institutional pharmacy businesses of AmerisourceBergen Corp. and Kindred Healthcare Inc. into a stand-alone company.

Both companies stand to benefit as blockbuster drugs like Lipitor, Plavix and others lose patent protection over the next few years. That will allow cheaper generic versions to enter the market, and it means bigger profit margins for Omnicare and PharMerica.

PharMerica accused Omnicare of "self-serving tactics" in taking the offer public. The Louisville, Ky., company said it has rejected Omnicare's offers because they undervalue the company and are not in the best interest of PharMerica's shareholders. PharMerica added that it is open to discussing a transaction, but that a deal with Omnicare could be disruptive to its customers and employees, and Omnicare is not willing to assume the risks involved in completing the proposed deal.

"Antitrust clearance … is likely to be difficult to achieve and involve lengthy administrative and court proceedings," PharMerica said. Omnicare and PharMerica are the two largest institutional pharmacy companies in the U.S., and according to Santangelo, they control a combined 60 percent of the market. Santangelo said the Federal Trade Commission would probably require the companies to divest some businesses before it approved any sale.

Omnicare, based in Covington, Ky., said the deal could be completed quickly and it believes regulators wouldn't oppose the transaction. The company reported a loss in the second quarter after it paid $21.1 million to settle allegations it overcharged Medicaid programs in Michigan and Massachusetts, violating state laws.

Meanwhile, PharMerica's second-quarter profit surged because of greater sales of generic drugs and better contract terms.