Horizon Pharma Makes Hostile Offer To Buy Depomed In $3 Bln All-Stock Deal

(RTTNews) - Biopharmaceutical company Horizon Pharma plc (HZNP) offered Tuesday to acquire all outstanding shares of smaller peer Depomed, Inc. (DEPO) for $29.25 per share in an all-stock deal valued at about $3 billion. The offer has the unanimous support of Horizon's board of directors.

"The strategic and financial benefits of our proposal are highly compelling. 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," Horizon Chairman, President and CEO Timothy Walbert said.

Horizon's offer price of $29.25 per share in Horizon ordinary shares represents a premium of 41.7 percent to the Depomed closing share price of $20.64 on Monday. The proposed deal will see Depomed shareholders owning about 25 percent of the combined company, following closure.

The proposed deal, if consummated, would immediately and substantially add to Horizon's adjusted earnings per share. It would also generate significant revenue, tax savings and operating synergies.

Horizon has projected full-year 2015 pro forma combined net sales in excess of $950 million and adjusted EBITDA in excess of $350 million.

The proposed deal will give Horizon access to Depomed's newly acquired Nucynta franchise, Gralise, Cambia, Lazanda and Zipsor to enhance growth of the entire portfolio. The combined company would have 13 marketed medicines, nearly doubling Horizon's current portfolio. They will also have more than 700 sales representatives in Primary Care, Orphan and Specialty business units.

Horizon noted that it made several attempts to engage Depomed's management and board of directors in friendly and confidential discussions since March in order to strike a deal. However, Depomed's management and board have refused to engage in discussions and rejected proposals.

Horizon has now taken the offer directly to the shareholders of Depomed, who are expected to realize the financial, strategic and operational benefits of the offer, and encourage its board to engage in discussions to negotiate a mutually acceptable agreement.

The offer is subject to the pre-condition of confirmatory due diligence. This pre-condition may be waived by Horizon Pharma, at its discretion.

Horizon said it has engaged Citigroup Global Markets Inc. and Jefferies LLC as lead financial advisors.

HZNP closed Monday's regular trading session at $34.54, up $0.16 on a volume of 3.09 million shares, and DEPO closed at $20.64, up $0.04 on a volume of 0.85 million shares.