Horizon Pharma PLC's hostile bid for Depomed Inc. came a step closer to fruition on Friday as shareholders approved the authorization of a huge share issuance to support the biopharmaceutical company's $1.01 billion all-stock public takeover.

Horizon stockholders voted to issue up to 81.7 million shares to help fund the deal, and Chief Executive Timothy Walbert said the vote shows the confidence shareholders have in the value of a potential Depomed acquisition.

He noted that the company looks forward to "continued engagement with Depomed shareholders as we work towards achieving this important merger."

Shares of Horizon rose 6.6% while shares of Depomed shrunk 3.3% in midday trading Friday.

Proxy advisers ISS and Glass Lewis had urged Horizon investors to reject the share issuance.

Horizon's latest takeover proposal for Depomed offered 0.95 of a Horizon share for each Depomed share held, which valued the company at $16.73 a share as of Thursday's close.

Depomed's board has urged its stakeholders to refuse the unsolicited bid, saying it significantly undervalued the company.

Horizon is a biopharmaceutical company that focuses on treatments for orphan diseases. Depomed, based in California, specializes in products that treat pain and central nervous system disorders.

Horizon first made an all-stock offer to buy Depomed in a letter sent May 27, and then went public with an increased proposal mid-July after the previous offer was rejected by Depomed's board.

Horizon has also been seeking to replace the Depomed board.

Depomed's board has repeatedly said Horizon's takeover attempt is "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 pain killer Nucynta from Janssen Pharmaceuticals Inc., a unit of Johnson & Johnson.

In July, 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. The exchange offer is contingent on, among other things, the withdrawal of the poison-pill plan.

Write to Anne Steele at Anne.Steele@wsj.com

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(END) Dow Jones Newswires

November 13, 2015 14:45 ET (19:45 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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