Depomed confirms bid increase from Dublin-based Horizon

Horizon Pharma has told Depomed that it's prepared to increase its $2 billion offer for the company and include a cash component of as much as 25 per cent of the deal, according to Depomed chief executive Jim Schoeneck.

The willingness to boost the bid was conveyed "late last week" by Horizon chairman and chief executive Tim Walbert, and confirmed in an e-mail from a board member, Mr Schoeneck said in a letter to Walbert that was released on Friday.

Horizon, which reported second-quarter net income of $31.8 million, after reporting a loss in the same period a year earlier, hasn’t made a new proposal and is insisting that Depomed first make a counteroffer, according to the letter.

“It does not make any sense to engage with Horizon unless you make a sufficiently compelling and detailed proposal,” Mr Schoeneck wrote.

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 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.

Depomed also released an investor presentation Friday that it said shows that the company would be a more valuable part of a combination than is reflected in Horizon’s offer.

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

Depomed shares gained 5.3 per cent to $31.60 in early trading on Wall Street, while Horizon shares gained less than 1 per cent to $33.71.

Horizon, which posted revenue of $172.8 million for its second quarter, said it expects full-year revenue in the range of $660 million to $680 million.

Additional reporting: Bloomberg