AstraZeneca Plc’s stock has been rising for two weeks on growing expectations the British drugmaker will re-engage in merger talks with Pfizer Inc.

The two sides walked away from a 69.5-billion-pound ($116 billion) deal in May after failing to reach an agreement on price. Under the U.K.’s takeover rules, AstraZeneca or New York-based Pfizer now can take the first steps toward a renewed deal. AstraZeneca’s shares are up 12 percent since the close of trading Aug. 15, a move analysts and investors attribute to bets negotiations might be revived.

“I’m sure they’re talking privately and would prefer to keep it private, given it didn’t go that well in the public markets last time,” said Jeff Jonas, a portfolio manager at Gabelli Funds, which own Pfizer stock.

Pfizer’s bid for AstraZeneca was the subject of political scrutiny in the U.K. and the U.S. The U.K. government sought guarantees that Pfizer would preserve jobs in medical research in Britain, while U.S. lawmakers criticized Pfizer’s proposed move overseas, which would let it avoid some U.S. taxes.

Price was the biggest sticking point when talks collapsed in May. At the time, AstraZeneca told Pfizer that it would need to offer at least 58.85 pounds a share, while Pfizer’s final proposal was 55 pounds.

U.K. rules require would-be acquirers who walk away from a bid to wait six months in most cases before making a renewed approach. For Pfizer, that waiting period ends Nov. 26. Under a limited set or circumstances, they can talk again after three months. That deadline passed on Aug. 26.

Deal Revisited?

“I do think it’s likely that the deal gets revisited by Pfizer,” said Damien Conover, an analyst at Morningstar Inc., though he expects Pfizer to re-approach AstraZeneca in November, rather than now.

Rebecca McClure, a Pfizer spokeswoman, said the company’s position hasn’t changed since May when it said it didn’t intend to make another offer. Esra Erkal-Paler, an AstraZeneca spokeswoman, declined to comment on either the share price move or whether management was talking with Pfizer again.

Under U.K. rules, after three months a target can invite a bidder to re-enter talks. The bidder can also make its own approach, approved by U.K. regulators, with a single knockout offer it is sure the target could accept.

For Pfizer, AstraZeneca offers more than just an overseas address. The London-based drugmaker has a pipeline of products coming onto the market. Since May, the company agreed to spend as much as $2.1 billion to expand in respiratory treatments, raised its sales forecast and reported successful trial results on three cancer medicines that may become blockbusters.

Other Options

AstraZeneca is not the only potential big deal for Pfizer. The U.S. drugmaker is also looking at other targets including Dublin, Ireland-based Actavis Plc, people familiar with the matter have said. Actavis spokesman David Belian wasn’t immediately available for comment.

“Actavis would make more sense,” Jonas said. “Pfizer could still do the tax inversion, you’d get a good generics business and they have a good branded business so Pfizer could use that deal to split in two.”

Pfizer Chief Executive Officer Ian Read has divided the drugmaker into three internal units, two focused on brand-name drugs and one that runs a portfolio of off-patent and older medicines. A deal would allow him to grow those units as a prelude to possibly splitting the drugmaker into two or three separate companies.