Depomed Sends Letter to Horizon Pharma

Depomed has sent the following letter to Horizon Pharma:

August 7, 2015

Timothy P. Walbert
Chairman of the Board, President and Chief Executive Officer
Horizon Pharma plc
Connaught House, 1st Floor, 1 Burlington Road
Dublin 4, Ireland

Dear Tim, 

In our conversation late last week, you stated that Horizon was prepared to increase its proposal and to include a cash component of up to 25%. This was confirmed in an email late Friday night from one of your Board members to our Board Chairman. Yet you still have not made a new proposal. Instead, you have insisted that we need to first make a counter-offer. It does not make any sense to engage with Horizon unless you make a sufficiently compelling and detailed proposal.

As we have previously told you, in order to be compelling, a proposal must reflect what Depomed would contribute to the combined company, as well as the value of synergies from the transaction. Surely your bankers and internal staff have this information as confirmed by the reference from one of your bankers last week.

You continue to be wrongly focused on a "premium to unaffected price", when you know that our so-called "unaffected price" did not take account of our recent strong results, the additional insights we provided about NUCYNTA and the confirmation this week that all Depomed products remain covered by the major PBMs. What matters is the intrinsic value of Depomed and the contribution Depomed would make to the combined company. The inclusion of 25% cash does not change this from being mostly a stock-for-stock transaction.

We are making available an investor presentation today which shows the continued period of accelerated growth we have experienced and Depomed’s promising outlook. It also includes an equity contribution analysis which shows Depomed's equity contribution to the combined company-- for example, based on revenues in 2016 and 2017, Depomed's equity contribution would be 33% and 35%, respectively. The Depomed shareholders are entitled to an ownership interest that is commensurate with what Depomed would contribute to the combined company as well as a share of the synergies.

Your willingness to increase your proposal is an obvious recognition that the vast majority of our shareholders do not support what you have proposed. Our Board takes its fiduciary duties seriously and will always be open to any compelling proposal that creates value for its shareholders, but we are prepared and committed to take actions that we deem appropriate to protect our shareholders’ interests, even if it involves protracted litigation and a proxy fight.

Best regards, Jim