Bristol-Myers Squibb (NYSE: BMY) has long been a rumored takeover target, but news earlier in the week that Peter Dolan was forced out as the company's chief executive officer has put the rumor mill into overdrive.

Today, the focus is on an article from New Jersey paper The Star Ledger, which said Schering-Plough (NYSE: SGP) is seriously considering a merger with Bristol-Myers Squibb (NYSE: BMY). According to the report, people with knowledge of the plan said the merger would make sense for both companies. They say the deal would give Schering-Plough a drug-discovery pipeline, cancer treatments and antiviral therapies and give Bristol-Myers a strong CEO and a hot cholesterol fighting drug.

Recent media speculation has centered around Sanofi-Aventis (NYSE: SNY) or GlaxoSmithKline (NYSE: GSK) as potential suitors for Bristol-Myers.

Some on Wall Street have suggested that the Star Ledger story could be an attempt by Schering-Plough to gauge the market's reaction to such a deal. Others suggest it is pure-speculation and a deal between the two is unlikely.

Shares of Bristol-Myers Squibb are up 1.4% in mid-day trading Friday. Schering-Plough is up 1.6%.