NEW YORK (The Deal) -- Dublin, Ireland-based Horizon Pharma (HZNP) - Get Horizon Therapeutics Public Limited Company Report announced a bid to acquire Depomed (DEPO) for $3 billion on Tuesday, after the target declined to meet with Horizon Pharma, despite attempts to engage beginning in May.
Under the terms of the proposed transaction, Horizon Pharma would acquire all outstanding shares of Depomed for $29.25 each in an all-stock transaction, which represents a 42% premium to its closing price on Monday.
In a letter sent to Depomed on Tuesday, Horizon Pharma's Chairman, Chief Executive and President Timothy P. Walbert wrote that the Irish company had originally sent a letter to the Newark, Calif.-based specialty pharmaceutical company on May 27 to no avail.
The original offer included the same terms as the offer outlined on Tuesday. Before Tuesday's announcement, Horizon Pharma had sent a follow-up proposal on June 12, which was rejected and met with a response that the board wouldn't meet with Horizon Pharma's management.
Shares of Depomed were up on Tuesday morning following the news, trading at $27.76 after closing at $20.64 on Monday. Depomed hadn't submitted any response as of Tuesday morning.
If Horizon Pharma and Depomed were to combine, the company would have 2015 net sales of $950 million and earnings before interest, taxes, depreciation and amortization of more than $350 million, according to the letter sent to Depomed.
The companies would also have the opportunity to penetrate more markets as Horizon Pharma's presence in orphan disease and specialty markets that complement Depomed's specialty products for pain, the letter stated.
If the deal were to be executed, Depomed shareholders would own 25% of the merged companies.
This year Depomed purchased the rights to a portfolio of pain medications from Johnson & Johnson's (JNJ) - Get Johnson & Johnson (JNJ) Report research arm, Janssen Pharmaceuticals, for $1.05 billion. The deal added a package of drug rights known as the Nucynta franchise, which includes pain management therapies.
Horizon Pharma most recently acquired genetic-disorder treatment maker Hyperion Therapeutics (HPTX) in a cash deal valued at $1.1 billion. The deal was one of four that Horizon Pharma pointed to as drivers to grow net sales, EBITDA and diversify business.
Horizon has retained Citigroup Global Markets and Jefferies as its financial advisers.
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