The latest reports from Horizon Pharma’s bid for a hostile takeover of Depomed shows Horizon offering to exchange a portion of its stock for shares of its rival Depomed – at an exchange rate of 0.95 Horizon shares for each Depomed share. The offer has an expiration date of early November and would be valued at $2.4 billion. This $33/share offer represents a 60 percent premium to the $20.64 closing price of Depomed stock in early July, before Horizon went public with its acquisition proposal.
Depomed has already rejected that offer, which was an increase from a prior bid of $29.95 per share. In response, Horizon encouraged Depomed’s stock owners to call special meetings to vote on replacing Depomed’s board of directors. Horizon currently owns a 3.7 percent stake in Depomed.
Not surprisingly, Depomed’s response was swift and blunt, noting that their board unanimously rejected Horizon’s revised proposal. It believes that the 95 percent exchange rate still significantly undervalues Depomed, and does not reflect the value Depomed would contribute to the combined company. The company stated that securities laws prevent Depomed from making any further comments on Horizon’s exchange offer or its terms until after the appropriate filings are made. Until that time, Depomed shareholders were advised to take no action.
Depomed’s board has also adopted a “poison pill” measure that aims to thwart a hostile takeover attempt by essentially making it too expensive.
Horizon Pharma makes the rheumatoid arthritis drug Duexis. Depomed has a portfolio that includes the migraine drug Cambia and the painkiller Nucynta ER.
Essentially, this comes down to a battle for a larger share of the $30 billion pain management pharmaceutical market.
