DepoMed Inc. (DEPO) Spikes on Buyout Proposal from Horizon Pharma

Shares of Newark, California, based DepoMed, Inc. (DEPO) rose sharply on Tuesday, against the backdrop of a strong day in stocks overall. DepoMed's stock was up 38.66%, rising $7.98 per share, to close at $28.62, on volume of 20,027,429 shares. The company reported that it received an unsolicited proposal from Horizon Pharma Plc (HZNP) to acquire all of DepoMed's stock.

Founded in 1995, DepoMed, Inc. is a specialty pharmaceutical company focused on the development, manufacturing and marketing of medications designed to treat pain and other conditions of the central nervous system.
Its primary products include Gralise, a product used in the management of postherpetic neuralgia; Zipsor, used for the treatment of mild to moderate acute pain; and Lazanda, a product for the management of breakthrough pain in adult cancer patients. The company has also developed and licensed Acuform, which is a drug-delivery technology. The company's stock trades on the NASDAQ.

Founded in 2011, Dublin, Ireland, based Horizon Pharma Plc is a specialty biopharmaceutical company engaged in identifying, developing, acquiring and marketing differentiated products that address unmet medical needs. It markets products for the treatment of arthritis, inflammation and orphan diseases. On Tuesday, Horizon Pharma's stock closed down 1.97%, shedding 68 cents, to close at $33.86.

The offer from Horizon Pharma was an unsolicited, nonbinding proposal, subject to numerous conditions. Under the proposal, Horizon Pharma will acquire all of the outstanding shares of DepoMed in an all stock transaction, at a price of $29.25 per share. The total value of the offer is about $3 billion.

The current proposal represents the third such offer from Horizon Pharma to acquire DepoMed. According to DepoMed management, the most recent offer is virtually identical to the offer presented on May 27, then reiterated on June 12. In considering the offer, and after consulting with their legal counsel, the management of DepoMed unanimously decided that it would not accept the previous proposal, deeming it to be "not in the best interests of DepoMed or its shareholders . Among other points of contention, DepoMed's board of directors concluded that the offer from Horizon Pharma undervalues DepoMed. The Board concluded that continuing to follow its current strategic plan was the better path.

The combined operations of both companies would roughly double the size of Horizon Pharma, creating annual sales in the range of $350 million.

"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, said Horizon Pharma Chief Executive Officer, Tim Walbert. "We anticipate that DepoMed shareholders will assist us in convincing DepoMed management and their board to do the right thing and work toward a negotiated settlement and engage with us toward the right end.

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Published on Jul 8, 2015
By Kevin Mercadante

Copyrighted 2016. Content published with author's permission.

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