Horizon Pharma Goes Hostile With $3 Billion Bid for Depomed
Published: Jul 07, 2015
July 7, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
Irish firm Horizon Pharma has made a hostile $3 billion bid for painkiller drugmaker Depomed, Inc. , after a series of advances made by Horizon have been decidedly rebuffed since its initial offer in May.
Under the terms of the offer, Horizon would payDepomed, Inc. $29.25, which is unchanged from its first May offer, but still provides a 42 percent mark-up from the company’s Monday closing price.
"Despite our repeated attempts beginning in March to engage Depomed's management and board of directors in friendly and confidential discussions, Depomed's management and board have refused to engage in discussions with us and rejected our proposal," said Timothy P. Walbert, chairman, president and chief executive officer at Horizon Pharma.
"We have elected to bring this proposal to the attention of Depomed's shareholders, who we expect, given the opportunity to understand the financial, strategic and operational benefits of this transaction will support it and will encourage their Board and management to begin constructive discussions with us promptly with the goal of completing a negotiated transaction."
Thomson Reuters calculated the equity value of the all-stock offer works out to around $1.74 billion, based on 59.6 million outstanding Depomed shares.
Horizon is likely hoping to wrap Depomed’s five-product painkiller drug pipeline into its own, including star candidate Nucynta, which it bought from Johnson & Johnson for $1.05 billion in January.
So far, news of the potential deal has been met with warmth on Wall Street, where traders pushed Depomed’s share price up to $28.75 in mid-morning trading. Analyst, too, said the partnership showed promise.
"We think a Depomed sale makes sense if management can drive additional premium by engaging Horizon Pharma and possibly others," RBC Capital Markets analyst Randall Stanicky said in a note to client.
Others have noticed that whoever acquires Depomed also inherits its legacy of legal problems, including a looming generic threat from rival Allergan Inc. .
"The strategic and financial benefits of our proposal are highly compelling," said Walbert. "Given the significant revenue and operating synergies, as well as considerable tax savings, we would create substantial long-term value for Depomed's shareholders in addition to the immediate value realized through the proposed premium.
Horizon said the proposal is still subject to due diligence but noted it had delivered the full text of the letter delivered to Depomed today, July 7, 2015.
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