UPDATED: Depomed swallows poison pill to keep hostile Horizon at bay

Depomed was serious when it said it wasn't interested in Horizon Pharma's $29.25-per-share bid. Following the Irish pharma's move to take its hostile overture public last week, the company has put up its takeover defenses.

The California drugmaker has taken up a poison-pill plan, and it'll be triggered if any person or group acquires a stake in the company larger than 10%, it said in a Monday filing.

Depomed ($DEPO) is hoping that'll keep Horizon ($HZNP)--a suitor it's already rejected twice--at bay. According to the company, Horizon's all-stock bid is not in its "best interests," given the period of "significant growth" it's currently in and the recent addition of Johnson & Johnson's ($JNJ) Nucynta pain franchise, which it thinks is going to give revenue and EPS a healthy bump.

Horizon, though, sees things differently. A tie-up would nearly double its roster of marketed meds, bringing its total to 13 products. And many of Depomed's offerings also come with patent protection through at least 2022, another factor Horizon likes.

Horizon CEO Timothy Walbert

To appeal to shareholders, the one-time Illinois pharma is also touting the tax advantage it snagged when it snuck an inversion deal in just before the U.S. tightened its reins. Thanks to its Vidara buy, it can offer Depomed investors "significant" tax savings as part of its proposal.

"Since we made our proposal to acquire Depomed ... the reaction from both companies' shareholders has been supportive of the combination," Horizon CEO Timothy Walbert said in a statement. "We urge the Depomed board to stop taking actions to frustrate the will of their shareholders and engage with us to negotiate a mutually acceptable transaction."

Horizon isn't the first to leverage its inversion benefit in a hostile pursuit. Last year, Valeant ($VRX) did the same while chasing after Allergan ($AGN), though it ultimately lost that battle when white knight Actavis swooped in.

- read Depomed's 8-K

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