Horizon Pharma has launched a $3-billion hostile takeover bid for Depomed, taking its offer straight to shareholders after an initial approach was spurned by the latter’s management.
Horizon is proposing to acquire all outstanding stock of Depomed for $29.25 a share in an all-stock, tax-free exchange, marking a premium of 42% on its July 6 closing price. The move, it argues, would generate significant revenue and operating synergies as well as considerable tax savings.
The combined company would have 13 marketed medicines, nearly doubling Horizon's current portfolio, with more than 700 sales representatives in Primary Care, Orphan and Specialty business units, and projected full-year pro forma 2015 net sales in excess of $950 million, it says.
"The strategic and financial benefits of our proposal are highly compelling,” noted Timothy Walbert, Horizon’s chairman, president and chief executive, adding that it “would create substantial long-term value for Depomed's shareholders in addition to the immediate value realised through the proposed premium”.
But Depomed has thus far seemed less than keen. Its board of directors has “unanimously determined” that Horizon’s proposal is not in the best interests of the company, and remains confident that “continuing to execute on its strategic plan is the best path forward”. The bid, it argues, fails to reflect “the inherent value of Depomed in light of the company's standalone prospects”.
Nevertheless, Horizon says it is expects Depomed shareholders will support its bid “once given the opportunity to understand the financial, strategic and operational benefits”. Also, Walbert told Reuters a key driver of the hostile move was the significant overlap between both companies shareholders, with more than 25% of Horizon shareholders also owning Depomed stock and likely a smaller portion of Depomed shareholders also holding Horizon shares.