Horizon Biopharm Pulls Out of $2 Billion Hostile Takeover Bid for Depomed After Court Ruling
November 20, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Dublin, Ireland-based Horizon Pharma Plc announced yesterday that it was ending its acquisition attempt of Newark, Calif.-based Depomed, Inc. .
Horizon’s hostile bid for approximately $2 billion started on May 27 and gathered some steam when it upped the bid in July after the first bid was rejected. Depomed’s board repeatedly rejected Horizon’s offers, saying the acquisition was “not in the best interest” of the company because it was growing quickly and had high expectations from its acquisition to the U.S. rights to Nucynta, a pain killer, it bought from Janssen Pharmaceuticals Inc., a unit of Johnson & Johnson .
In 2013, both Depomed and Horizon bid on Nucynta. Both companies signed a confidentiality agreement with Janssen, according to The Wall Street Journal, “not to use the information gleaned during the bidding for any other purpose.” Depomed accused Horizon of inappropriately using the data in its bid, and filed a lawsuit.
Yesterday, Judge Peter Kirwan of the Superior Court of California for the County of Santa Clara granted Depomed’s motion for preliminary injunctive relief against Horizon.
“While we strongly disagree with the court’s ruling, we are withdrawing our offer to acquire Depomed,” said Timothy Walbert, chairman, president and chief executive officer of Horizon, in a statement. “Today’s ruling by the court does not affect our 2016 guidance or long-range plan or expectations. We have built a strong and diversified portfolio of medicines that we expect will exceed $750 million in net sales in 2015 and we expect will drive nearly $1 billion in net sales in 2016. As we look to the future, we are committed to our strategy of complementing our strong organic growth, which has the potential to double our net sales to approximately $2 billion by 2020, with value enhancing acquisitions. While we are disappointed by the court’s ruling, Depomed was only one of many attractive acquisition opportunities we have been actively pursuing.”
Depomed put out a statement today, saying, “Depomed’s Board and management team are committed to enhancing long-term value and we look forward to continuing to execute on our strategy and delivering significant and sustainable returns for all shareholders.”
Earlier this week Depomed announced it had inked a deal for U.S. and Canadian rights to cebranopadol, a pain killer, with Grünenthal GmbH. The company plans to take the drug into a Phase III trial for chronic lower back pain (cLBP) and other pain indications by 2017.
“The acquisition of this novel compound with its unique structure and characteristics fits perfectly with our long-term commitment to expanding our leading pain management portfolio,” said Jim Schoeneck, president and chief executive officer of Depomed in a statement. “This acquisition builds on Depomed’s leadership in pain, our successful experience in drug development, and further demonstrates our continued ability to do financially creative acquisitions with the goals of improving the lives of patients and increasing shareholder value.”
Horizon made three offers for Depomed, all of which were rejected by the Depomed board. Horizon appealed directly to Depomed’s shareholders. Two independent proxy services recommended voting down Horizon’s proposal to replace Depomed’s board and accept a $2 billion stock offer. Reportedly, less than one percent of Depomed shareholders tendered their shares by last week.