Tesoro stock gained $6.63, or 11.6 percent, to $63.83 in midday trading. The stock earlier traded as high as $65.98, eclipsing a previous 52-week high of $64.65.

Tracinda Corp., led by billionaire investor Kirk Kerkorian, plans to offer $64 apiece for 21.9 million Tesoro shares, or about 16 percent of the company's outstanding stock, Tracinda said Friday. Tracinda already owns about 4 percent of the refiner's stock.

The bid is "very bullish for Tesoro and the broad refining sector," Goldman Sachs analyst Arjun Murti said in a note to clients. He added he considers the sector undervalued.

However, Bear Stearns labeled the bid an "ill-timed purchase," due to weakening industry fundamentals. Refining margins have been hit by high oil prices and low gas prices in recent months, despite refiners efforts to lower production and inventory levels to support demand.

Bear Stearns analyst Nicole Decker called refiners' surging share prices "precariously high" and said she expects Tesoro shares to deflate. She reiterated her "Underperform" rating on Tesoro's shares.