Depomed, heeding activist's advice, prepares to go up for sale

Depomed

All that investor pressure from Starboard Value may be getting through to Depomed, which is reportedly ready to take some of its activist’s advice.

The California drugmaker is preparing it put itself on the block, heeding calls from the proxy brawler to explore a sale, sources tell Reuters. Depomed is just waiting for a court decision to clear up some patent exclusivity issues surrounding leading med Nucynta, and after it has that verdict--expected by the end of the month--it’ll jump-start the sales process.

To do so, it’s working with Morgan Stanley, which last year helped beat back a hostile pursuit from Ireland’s Horizon Pharma.

While Depomed may not have liked Horizon’s bid, as CEO Jim Schoeneck told FiercePharma in a January interview, “we’re open” to other buyout offers,

"It really is about value and currency, and we're always open to something that can meet those hurdles," he said.

Starboard began agitating for a sale of the $1.3 billion Depomed back in April after announcing it had nabbed a stake of close to 10% in the company. It pointed to that thwarted Horizon takeover--and the major decline in Depomed’s shares that’s occurred since--as proof of need for a change. Not long thereafter, it unveiled plans to request a special meeting where it hoped to gain board control.

But Depomed has done what it can to ensure that meeting falls after it has word on Nucynta, arguing that at that point, shareholders will have all the info they need surrounding the company’s “most important asset” to make an “informed voting decision.”

Starboard, though, isn’t buying that line. The way the rebel investor sees it, Depomed has been attempting “to manipulate our special meeting process and disenfranchise shareholders with needless stratagems,” CEO Jeffrey Smith wrote in a July letter to shareholders. 

- get more from Reuters

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