Horizon Pharma Files Lawsuit, Seeks Change of Depomed’s Board of Directors in Takeover Attempt
August 4, 2015
By Alex Keown, BioSpace.com Breaking News Staff
DUBLIN – Irish drugmaker Horizon Pharma fired off a two-pronged maneuver including calling for a special shareholder’s meeting and filing as lawsuit as it continues to take over California-based rival Depomed, Inc. .
On Monday the Dublin-based maker of drugs for pain and central nervous system conditions, called a special shareholders meeting seeking the removal of all current Depomed directors and an election of new directors that presumably are in favor of Horizon’s takeover proposal. Additionally, Horizon said it was seeking a series of amendments to company bylaws “intended to reverse the changes made by the Depomed board that have the effect of disenfranchising shareholders and delaying or preventing the calling of a special shareholders meeting.” Horizon, which owns approximately 1 percent of Depomed stock, said it wants to team up with other shareholders in its attempt to depose the Depomed board of directors. Depomed’s bylaws say shareholders owning 10 percent or more of common stock have the right to call a special meeting.
In a secondary action, Horizon filed a lawsuit Monday in the Superior Court of California for the County of Santa Clara, challenging the legality of Depomed’s “poison pill” defense of the takeover, alleging Depomed’s directors are not taking the shareholder’s best interest to heart. Also, the lawsuit challenges the aforementioned bylaws. Timothy P. Walbert, chief executive officer of Horizon, said in a statement the “tactics were a blatant affront to applicable law and Depomed's fiduciary duties.”
“We have repeatedly sought to engage in good faith with Depomed's management team and board towards a consensual agreement to combine our two companies," Walbert, said. “However, as a result of the improper efforts of Depomed's management team and board to entrench themselves, we have taken definitive steps to empower Depomed's shareholders to act in their own best financial interests through a special shareholders meeting.”
Horizon has been seeking to acquire Depomed to expand its pain treatments and save on overlapping costs, Bloomberg Business reported.
Depomed fired back at Horizon with a lawsuit of its own. The company said the counter complaint filed in the Superior Court of California for the County of Santa Clara will show “Horizon's unsolicited bid to acquire the company is predicated on the improper and unlawful use of highly confidential and proprietary information related to NUCYNTA, Depomed's leading product.” Depomed will also see an injunction against Horizon preventing the Irish company from “continuing its improper and unlawful use of Depomed's highly confidential and trade secret data, and to prevent Horizon from continuing to make and failing to correct its false and misleading statements in connection with its attempt to acquire Depomed.”
Depomed’s board of directors rejected Horizon’s attempt to acquire all outstanding common stock for $33 per share in July. The board said the pricing was inadequate and not in the best interest of the company. The offer of $33 per share was an increase over an earlier offer for $29.25 per share, the New York Times said.
Depomed said it will review Horizon’s request when it has been received and if the requests meet the requirements of the bylaws, set a date for the special shareholder’s meeting by Aug. 31.
Regarding the lawsuit, Depomed said “the actions taken by Depomed's board of directors represent a reasonable and customary exercise of the Board's fiduciary duties and are intended to protect the ability for all Depomed shareholders to realize the long-term value of their investment in the company.
Depomed’s defense has been bolstered by strong growth in the second quarter led by its lead pain product NUCYNTA. The drug is expected to be a strong performer through 2020, The Street noted this morning.