Horizon Pharma Withdraws Bid for Depomed Essay
Horizon Pharma Withdraws Bid for Depomed, 492 words essay example
Essay Topic: situation, issue, process, california
A long awaited up and down bid is temporarily canceled by California court between Horizon Pharma PLC (NYSEHZNP) and Depomed Inc. (NasdaqDEPO) on the allegation upon Horizons malpractice of confidential information. After the court directives, Horizon withdrew its $1 billion gratuitous offer for Depomed.
After the decision, a hit and run like situation come to an end, which is prevailing for the last six months. The board of directors of Depomed showed full resistance to this acquisition and showed a sharp selloff in pharmaceutical stocks.
Both the companies have an agreement in 2013 when they are going in the process of bidding for Nucynta that they will not disclose the confidential information at any cost for any purpose. Depomed takes this issue in the California court that Horizon is man practicing the information as this information can help a lot to buyers in determining how much to offer, and after reviewing the details the court issued directive to hold the bid temporarily
This decision brings the nondisclosure agreements in open and they need more and more comprehensive scrutiny. The agreements are signed to get a foreign domicile to reduce the tax ratio. It is likely that the Depomed ruling will bring the issue of nondisclosure agreements in the spotlight.
This all scenario started when Horizon first made an allstock offer to purchase Depomed on May 27, and it then went public with an increased bid in July as the earlier offer was rejected.
The Board of director of Depomed rejected Horizon bid on three occasions and Horizon takes extreme step of appealing directly to the shareholders. The appealing does not put any major effect on the shareholders as only 10,404 shares of Depomed stock had been proposed by Friday morning.
Repeated times resistance by the board of governors on takeover by Horizon stating the reason that Depomed is in on the path of growth and with the addition of Nucynta from Janssen Pharmaceutical s Inc., a unit of Johnson & Johnson (NYSEJNJ) will give a reasonable boost in revenue generation.
Before the decision of the California Court, the offer of taking the shares of Depomed was extended to Nov. 20 and then on Friday it was extended to Nov. 30.
Horizons Chief Executive Timothy P. Walbert narrated in a statement. We are discouraged by the courts ruling Depomed was an option, but not the last for Horizon. We are actively pursuing more attractive acquisitions. Furthermore, he added that Horizon strongly disagreed with the ruling.
There is a confusion in Walberts statement as per his statement he is upset by the courts ruling as well as narrating Depomed is not the last one, but in the end of the statement he commented that he strongly disagreed with the court ruling.
On the other hand, Depomed announced that it has successfully implemented its acquisition and commercialization strategy, foreseeing a very bright future working as an independent company.
Depomed shares in premarket are down at 2.07%. The shares of HZNP were down 0.79%.