Illinois biotech firm Horizon Pharma has called off its $1 billion hostile takeover of Depomed, a California pharmaceutical company, after a court ruled Depomed’s use of a poison pill defense was legal.
Judge Peter Kirwan of the Superior Court of California for the County of Santa Clara on Thursday rejected Horizon’s motion for injunctive relief, saying Depomed’s plan to automatically issue more shares to current investors in the event of a hostile bid was not improper. Such a takeover defense, known as a poison pill, can sharply drive up the cost of an acquisition.
The judge also ruled that Horizon misused confidential information in its takeover attempt.
As a result, Horizon ended its six-month attempt to acquire Depomed and its portfolio of medicines that includes migraine drug Cambia, painkiller Nucynta ER and nasal spray pain medicine Lazanda. Horizon’s decision comes just two months after it announced it would seek a special shareholder meeting to replace Depomed’s directors.
“While we strongly disagree with the court’s ruling, we are withdrawing our offer to acquire Depomed,” Horizon CEO Timothy Walbert said in a statement.
In May, Horizon offered to buy Depomed for $29.25 a share. A month later, it raised the price to $33 a share. But the California company’s board spurned the offers, saying it wanted to remain independent.
Horizon said the ruling would not affect its 2016 financial guidance or long-range plans. Last month, Horizon said it would move its U.S. headquarters from one Chicago suburb to another and triple its workforce to about 600 people in about four years.
In trading Friday, shares of Horizon climbed $1.46, or 7.8 percent, to $20.28.