Horizon Pharma Willing to Sweeten Proposal If Depomed Talks

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Horizon Pharma Plc told Depomed Inc. that it’s prepared to increase its $2 billion offer for the company and include a cash component of as much as 25 percent of the deal -- if Depomed comes to the negotiating table.

The willingness to boost the bid was conveyed “late last week” by Horizon, Depomed said Friday in a letter. Horizon confirmed in an e-mail to Bloomberg that it’s willing to raise the offer, including adding the potential cash, but reiterated that Depomed must “engage in a meaningful way.”

Not so fast, Depomed said. Horizon hasn’t made an official new proposal and is insisting that Depomed first make a counteroffer, Depomed Chief Executive Officer James Schoeneck wrote. “It does not make any sense to engage with Horizon unless you make a sufficiently compelling and detailed proposal,” he said.

Horizon, based in Dublin, is pursuing Depomed to expand its line of treatments for pain and central nervous system conditions, and sweetened its bid after the Newark, California-based drugmaker refused to engage in discussions. By combining, the companies could save on overlapping costs and expand sales of Depomed products, Horizon said.

“This feels like we’re moving forward,” Randall Stanicky, an analyst at RBC Capital Markets, said in a note Friday. “We continue to think a deal can get done.”

Horizon said that if Depomed won’t talk, it will seek a shareholder vote on its offer.

Board Meetings

In a presentation to investors, Depomed said its board has met by phone or in person at least once a week since the initial Horizon proposal and has regularly consulted with shareholders. Horizon’s offer would leave Depomed shareholders with a percentage of the combined company below Depomed’s expected contribution to revenue, according to the presentation.

“Your willingness to increase your proposal is an obvious recognition that the vast majority of our shareholders do not support what you have proposed,” Schoeneck said.

Horizon shares slumped as much as 6.8 percent after Bloomberg reported that the company confirmed it had told Depomed a sweetened bid could include cash. The shares were down 1.8 percent to $32.15 at 9:56 a.m. Depomed shares gained 3.5 percent to $31.05.

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