Depomed Inc (NASDAQ:DEPO) announced that its Board of Directors, after careful consideration and with the assistance of its financial and legal advisors, has unanimously rejected Horizon Pharma PLC (NASDAQ:HZNP) revised proposal.

On August 13, 2015, Horizon revised its previous proposal and set an exchange ratio of 0.95 of Horizon shares for each share ofDepomed, and offered to include up to 25% in cash subject to a reduction in the total consideration per share. Depomed notes that the all-stock proposal has a current value below $30 per share,[1] which is less than the $33 per share proposal Horizon previously made, and represents ownership in the combined company of less than 29%, which we believe is well below what Depomed would contribute to the combined company.[2]

Depomed today sent the following letter to Timothy P. Walbert, Chairman, President and Chief Executive Officer of Horizon:

August 19, 2015

Timothy P. Walbert
Chairman of the Board, President and Chief Executive Officer
Horizon Pharma plc
Connaught House, 1st Floor, 1 Burlington Road
Dublin 4, Ireland

Dear Tim,

The Depomed Board of Directors has unanimously rejected the most recent proposal by Horizon Pharma, plc (“Horizon”), that provided for an exchange ratio of 0.95 of Horizon shares for each share of Depomed, and offered to include up to 25% in cash subject to a reduction in the total consideration per share (the “Revised Proposal”).

The Board strongly believes that the Revised Proposal significantly undervalues Depomed, and does not reflect the value Depomed would contribute to the combined company or the value of the synergies from the transaction.  Specifically, the Revised Proposal has a current value below your prior proposal, and an all-stock transaction would result in the Depomed shareholders owning under 29% of the combined company (even without taking into account the potential dilution resulting from the vesting of the additional nine million performance stock units granted in the second quarter).

We have consistently communicated to you that in the absence of a compelling proposal, we believe it is not in the best interests ofDepomed to engage with Horizon.  In addition, we believe many of your public and private assertions are completely inaccurate. However, it is counterproductive to have a back and forth when it would not change the fact that you have not made what we think is a compelling offer.  Our Board firmly believes that executing Depomed’s strategic plan will deliver substantially more value to Depomed shareholders than Horizon’s Revised Proposal.

Best regards,


Morgan Stanley & Co. LLC and Leerink Partners LLC are serving as financial advisors to Depomed and Baker Botts L.L.P. and Gibson, Dunn & Crutcher LLP are serving as legal counsel. (Original Source)

Shares of Depomed closed today at $31.59, down $0.26 or 0.82%. DEPO has a 1-year high of $33.74 and a 1-year low of $13.16. The stock’s 50-day moving average is $30.17 and its 200-day moving average is $24.39.

On the ratings front, Depomed has been the subject of a number of recent research reports. In a report issued on July 30, RBC analyst Randall Stanicky downgraded DEPO to Hold, with a price target of $32, which represents a slight upside potential from current levels. Separately, on July 14, Roth Capital’s Scott Henry reiterated a Buy rating on the stock and has a price target of $33.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Randall Stanicky and Scott Henry have a total average return of 11.4% and 28.0% respectively. Stanicky has a success rate of 58.9% and is ranked #476 out of 3740 analysts, while Henry has a success rate of 61.7% and is ranked #29.

DepoMed Inc is a specialty pharmaceutical company focused on pain and other conditions and diseases of the central nervous system.