Horizon has said it's ready to up its bid, Depomed CEO says. So where's the new offer?

Horizon CEO Timothy Walbert

Horizon Pharma ($HZNP) has told target Depomed ($DEPO) that it's prepared to hike its $2 billion offer for the company and throw in a cash component of up to 25%, according to Depomed chief Jim Schoeneck. And he wants to know where that sweetened offer is.

As Schoeneck wrote in a Friday letter to Horizon CEO Timothy Walbert, Walbert last week indicated Horizon was ready to raise its bid--a sentiment a board member confirmed Friday via email. But the company insists that first, Depomed needs to make a counter-offer--and Schoeneck doesn't understand the logic.

"It does not make any sense to engage with Horizon unless you make a sufficiently compelling and detailed proposal," he wrote to Walbert. And the way he sees it, Horizon's willingness to up the bid "is an obvious recognition that the vast majority of our shareholders do not support" it in its current form.

Tensions have been brewing between the two companies since Horizon first went public with its $29.25 proposal--one Depomed said "substantially" undervalued the company, especially in light of its recent deal to buy Johnson & Johnson's ($JNJ) Nucynta pain franchise. Horizon subsequently raised its all-stock bid to $33 per share, but Depomed shot that one down, too, arguing that it took "advantage of a temporary decrease" in its stock price.

Horizon, though, has warned Depomed that it intends to push down a hostile takeover path no matter how the California drugmaker feels about it, and earlier this week it followed through with that threat. Monday, it wrote to Depomed to get the ball rolling in requesting a special shareholders meeting, and it filed a California lawsuit challenging the legality of Depomed's poison pill and some of its recent bylaw amendments, too.

Depomed, for its part, has not taken the challenge lying down. It filed a complaint this week claiming that Horizon's offer is "predicated on the improper and unlawful use of highly confidential and proprietary information" relating to Nucynta and requesting an injunction to block the Irish pharma from continuing to use it.

"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," Schoeneck wrote Friday.

- read Depomed's release

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