Horizon increases proposal for Depomed

DUBLIN—In its ongoing attempt to acquire Depomed, Horizon Pharma plc has increased its acquisition proposal from $29.25 per share to $33 per share, a 60-percent premium to Depomed's closing price on July 6, the day before Horizon went public with its proposal. The increased offer is contingent on Depomed entering into good-faith discussions regarding such a transaction.

"Based on discussions we've had with Depomed's largest shareholders as well as our own shareholders, it is clear that they and the investment community strongly support a combination of our two businesses," Timothy P. Walbert, chairman, president and CEO of Horizon Pharma, said in a press release. "We are resolute in our commitment to acquire Depomed and we call upon Depomed's board of directors to listen to their shareholders, fulfill their fiduciary responsibilities and meet with us in order to promptly complete a negotiated transaction."

Horizon went hostile with its efforts on July 7 after continued refusal from Depomed, making public its $3-billion acquisition proposal. The original proposal offered $29.25 per share, a 42-percent premium to Depomed's closing price on July 6. Horizon noted that based on its guidance as well as Depomed's, “we would project full-year pro forma 2015 net sales and adjusted EBITDA in excess of $950 million and $350 million, respectively, as well as more than 700 sales representatives and 13 marketed medicines for the combined entity.” Horizon also foresees “meaningful sales and operating synergies.”

In response to the July 6 public proposal, Depomed noted that its board, “after careful consideration and in consultation with its financial and legal advisors, unanimously determined that it was not in the best interests of Depomed or its shareholders to pursue the Prior Proposal. The Board is confident that continuing to execute on its strategic plan is the best path forward for the Company and its shareholders at this time.”

Depomed's board felt that the proposal “does not reflect the inherent value of Depomed in light of the Company's standalone prospects,” pointing to its April 2015 acquisition of the U.S. rights to the Nucynta franchise, which includes “NUCYNTA ER (tapentadol) extended-release tablets indicated for the management of pain, including neuropathic pain associated with diabetic peripheral neuropathy (DPN), severe enough to require daily, around-the-clock, long-term opioid treatment; NUCYNTA (tapentadol), an immediate-release version of tapentadol, for management of moderate to severe acute pain in adults; and NUCYNTA (tapentadol) oral solution, an approved oral form of tapentadol that has not been commercialized.” Depomed re-launched both Nucynta and Nucynta ER at the end of June, and the company added that “The NUCYNTA franchise is a flagship product for Depomed in the multi-billion dollar pain market. The Board is highly confident in the Company's ability to deliver shareholder value by successfully executing its strategy for the NUCYNTA franchise and its other differentiated products.” Following its dismissal of the proposal, Depomed undertook a “poison pill” defense as a further step to ward off the acquisition attempt.

In light of Horizon's revised proposal, Depomed responded by noting that its board and financial and legal advisors would review the new proposal and advising its shareholders not to take any action at present. The company also noted in a statement that “today's purported increase does not reflect any increase in the amount of Horizon stock that the Depomed shareholders would receive, nor any increase in the pro-forma ownership for the Depomed shareholders, and is the result of the trading value of Horizon's stock having increased since it made its initial offer.”