Dallas, Texas 07/08/2015 (Financialstrend) – Horizon Pharma PLC (NASDAQ:HZNP), a $5.39 billion market cap manufacturer of painkillers, is in hot pursuit of a smaller-sized pain relief drug maker Depomed Inc (NASDAQ:DEPO), driving the latter’s share prices higher by 35%. On Tuesday, Horizon Pharma made a hostile bid of $3 billion, after Depomed had refuted earlier offers by Horizon Pharma. Since Depomed Inc refused to engage in talks, when Horizon Pharma initially offered on May 27, 2015, the hostile bid ensued.
The result of the big-cap biopharmaceutical company’s bid for the specialty painkiller-developer was a record high of $28.75 per share for Depomed on Tuesday. It also led to a fall of nearly 6% in share prices for Horizon Pharma PLC (NASDAQ:HZNP).
Depomed Inc (NASDAQ:DEPO) claimed on Tuesday that it was capable of ‘independently’ creating its own ‘significant and sustainable, long-term value,’ and that it had rejected Horizon Pharma’s offer, again.
It should be noted here that Horizon Pharma was able to make a hostile bid, because many of the shareholders of Depomed also hold Horizon Pharma’s shares.
Chief Executive Officer of Horizon Pharma PLC (NASDAQ:HZNP), Tim Walbert, in an interview with Reuters, shared that the ‘overlap’ of 25% of Horizon shareholders holding Depomed; as well as a smaller number of Depomed shareholders owning Horizon had led to Horizon reaching out to shareholders directly. Besides, Mr. Albert added, Depomed shareholders had been seeking him out, in recent times, to ‘discuss a possible deal,’ leading to the second round of bidding.
The offer of $3 billion is a premium of 42% of Depomed’s Monday’s prices. In terms of equity value the offer, which is an all-stock offer, is roughly valued at $1.74 billion, since the outstanding shares that Depomed has is 59.6 million. Despite Depomed’s latest rejection, it is unlikely that Horizon will raise its bid, as Mr. Walbert did not comment on the same.
In its current expansionist and consolidation mode, Horizon Pharma PLC (NASDAQ:HZNP) is keen to double its portfolio. Even as it bids for Depomed, it continues to hold discussions with other $20 to $200 million cap companies as well. However, it is Depomed, which continues to derive gains at stock markets, as of Tuesday’s closing.