Horizon Makes Second Offer to Buy Depomed, Gets Rejected Again

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The offer, valued at $3 billion, represents a 42% increase in Depomed’s share price.


Ireland-based Horizon Pharma officially offered to acquire Depomed for a total value of $3 billion, Horizon announced on July 7, 2015. Touting the immediate tax savings of the deal, the company says its offer is “highly compelling,” according to Timothy P. Walbert, chairman, president and CEO, Horizon, in a press release. "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,” Walbert added.

The offer to buy Depomed, which is considered a hostile takeover, was first proposed in May 2015. After Depomed’s rejection, Horizon says it has changed its strategy and will appeal to Depomed’s stakeholders. "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."


A letter to stakeholders explains that through the combination of the companies, full-year pro forma 2015 net sales and adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization] would be in excess of $950 million and $350 million, respectively, and the combined companies would have control of 13 marketed medicines. It also states that Horizon's portfolio, encompassing orphan disease, primary care, and specialty markets, would be complementary to Depomed's specialty products that target central nervous system disorders and pain.

Upon receipt of the unsolicited proposal, Depomed released a statement saying the offer did not reflect the “inherent value of Depomed,” adding that guidance for 2015 anticipates total product sales of its drug to treat neuropathic pain associated with diabetic peripheral neuropathy, Nucynta (tapentadol), to be $310–$335 million-and this includes only three quarters of the drug’s sales.