Please login to the form below

Not currently logged in
Email:
Password:

Horizon launches $3bn hostile bid for Depomed

Horizon wants to add Depomed’s pain therapies and CNS drugs to its products

horizon pharma logo 

Ireland's Horizon Pharma has launched a hostile takeover bid for Depomed of the US after being frustrated in its efforts to enter negotiations about combining the two companies.

Horizon was a US company until September 2014 when it closed a $660m takeover of Irish company Vidara Therapeutics just days before the US Treasury announced a clampdown on tax-inversion deals designed to sidestep the country's high corporate tax rate.

Now, Horizon wants to leverage its low tax rate by acquiring new product lines, adding to its revenue base and boosting profits. It is offering $29.25 per share for Depomed, a 42% premium over the company's closing share price on Tuesday, having already snapped up Hyperion Therapeutics for $1.1bn earlier this year.

Depomed manufactures a range of pain therapies - including recently acquired flagship product Nucynta (tapentadol) - and a range of central nervous system (CNS) drugs. Horizon wants to add these to its own range of products for arthritis and rare diseases - which would nearly double the size of its portfolio - and give the combined company around $950m in annual sales.

"Given the significant revenue and operating synergies, as well as considerable tax savings, we would create substantial long-term value for Depomed's shareholders," said Horizon's chief executive Timothy Walbert.

Horizon says it tried to start talks with Depomed in March but attempts to open "friendly and confidential discussions" were rejected, forcing it to take its offer directly to the US firm's shareholders.

In a letter addressed to Depomed CEO Jim Schoeneck, Walbert notes that the combined company "would be significantly larger and more diversified than either company individually and positioned to realise substantial and sustainable future growth."

Depomed issued its own statement yesterday indicating that its board had unanimously decided that the offer was not in the interests of the company and its shareholders, particularly as it has been made just as the company is expecting sales of its Nucynta product to accelerate.

The company said recently it is anticipating 2015 sales of $310m to $335m - triple its 2014 tally - and expects Nucynta to catapult it into the top five companies selling branded pain pharmaceuticals in the US by 2016.

"The organic growth rate for Depomed's current product portfolio appears to far exceed that of Horizon's current product portfolio in 2016 and beyond," said Schoeneck.

Horizon's bid comes as the value of M&A activity in the pharma sector is spiking in the first half of 2015, led by AbbVie's $21bn takeover of Pharmacyclics, Pfizer's $17bn purchase of Hospira, Alexion's $8.4bn deal with Synageva and Endo's $8bn merger with Par. 

Article by
Phil Taylor

8th July 2015

From: Sales

Share

Tags

Featured jobs

Subscribe to our email news alerts

PMHub

Add my company
Rainmaker Healthcare Communications

Rainmaker is an independent, award-winning communications agency with offices in London and Atlanta. Our experience across pharmaceuticals, generics, OTC, medical...

Latest intelligence

How can pharma engage with key stakeholders on NHS service transformation?
Steve How, Paul Midgley and Oli Hudson, of the Wilmington Healthcare consulting team, explain how pharma should make its case for change...
michael elliot
The race for an HIV ‘cure’
Supercharging therapies as pharma and patients work together...
Medopad: the up and coming unicorn transforming remote patient monitoring
Blue Latitude Health speaks to Medopad’s Martha Carruthers to learn how the start-up’s modular apps are helping patients with complex diseases....

Infographics