Horizon Pharma Drops Bid to Acquire Depomed

Irish biopharmaceutical giant Horizon had been pursuing Depomed, based in Newark, Calif., since May with a series of offers that Depomed had steadily rebuffed. Such a takeover defense, known as a poison pill, can sharply drive up the cost of an acquisition. The deal was worth about $1.1 billion as of Thursday’s closing price of Horizon.

During the first nine months of this year, Depomed recorded $121.597 million in net product sales from the Nucynta product franchise.

Sales of the other four drugs ranged from $12.475 million for Lazanda, to $59.317 million for Gralise. EBITDA is earnings before interest taxes, depreciation, and amortization.

“While we strongly disagree with the court’s ruling, we are withdrawing our offer to acquire Depomed”, Horizon CEO Timothy Walbert said in a statement. The company concluded by stating: “Ultimately, we strongly believe we have successfully executed our acquisition and commercialization strategy, and Depomed has a bright future as an independent company”.

Horizon Pharma (HZNP) is no longer attempting to takeover Depomed (DEPO). Both Depomed and Horizon had bid on the drug and it was info gleaned in that confidential process that Depomed alleged Horizon had improperly used to make its bid, the Wall Street Journal points out.

Horizon Pharma said it dropped its offer to acquire Depomed after a USA judge decided against granting the company injunctive relief regarding the legality of the latter’s poison pill and certain bylaw amendments announced in July. In a report issued on November 18, Janney Montgomery Scott analyst Ken Trbovich reiterated a Buy rating on DEPO, with a price target of $35, which implies an upside of 80.5% from current levels.

Overall, one research analyst has assigned a Hold rating and 4 research analysts have given a Buy rating to the stock. Depomed repeatedly rejected Horizon’s bids because the company said they undervalued the company.