Horizon Pharma PLC ramped up its pursuit of Depomed Inc.,
increasing its bid for the company to about $2 billion in a
proposed all-stock deal.
Still, shares of Depomed traded above the revised offer price
Tuesday, indicating investors may not think the bid will be enough
to secure a deal. Shares of Depomed were up 2.3% to $33.50 midday,
while Horizon shares fell 0.3% to $37.20.
The offer of $33 a share is up from Horizon's previous bid of
$29.25 a share, which Depomed rejected in late May. The new offer
represents a premium of 60% based on Depomed's closing price on
July 6, the day before the initial offer was made.
Depomed acknowledged receipt of the bid Tuesday and said it
would review it. Its board had earlier said the proposal was "not
in the best interest" of the company, given that it is in a period
of significant growth and is expected to benefit from its recent
acquisition of the U.S. rights to painkiller Nucynta from Janssen
Pharmaceuticals Inc., a unit of Johnson & Johnson.
Earlier this month, Depomed adopted a poison-pill plan that
would be triggered by a person or group acquiring a more than 10%
stake in the company, in an effort to stave off a takeover.
Under the terms, shareholders of Depomed, which makes pain
treatments, would own about 25% of the combined company. Horizon,
which focuses on treatments for orphan diseases, said it went
public with its offer because Depomed executives refused to engage
in talks with Horizon.
Last September, Horizon closed a deal to merge with Dublin-based
Vidara Therapeutics International Ltd. three days before U.S.
regulators cracked down on tax-beneficial corporate migrations
known as tax inversions, in which an American company moves its tax
home to a country such as the U.K. or Ireland, where corporate
taxes are lower.
Horizon Chief Executive Officer Timothy Walbert said in a
statement that buying Depomed would generate "significant revenue
and operating synergies, as well as considerable tax savings."
Depomed paid 38% of its profits in taxes last year, according to
regulatory filings. Ireland has a 12.5% corporate tax rate.
Write to Angela Chen at angela.chen@dowjones.com
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