Horizon drops hostile takeover attack on Depomed after legal ruling

After 8 months of first cajoling and then browbeating, Horizon Pharma ($HZNP) has given up its hostile takeover attempt to buy Depomed ($DEPO). It threw up its hands and walked away after a California judge stymied its effort, ruling that Horizon had improperly used confidential information in its bid.

Horizon CEO Timothy Walbert

The Dublin-based Horizon disagreed with the ruling but said today that enough was enough. "While we strongly disagree with the court's ruling, we are withdrawing our offer to acquire Depomed," CEO Timothy P. Walbert said in a statement. The drugmaker said its future was secure without adding Depomed.

As for Depomed, as its shares fell in mid-morning trading, it also said it expected to do well, particularly with the addition of Nucynta, the painkiller it bought recently from Johnson & Johnson's ($JNJ) Janssen unit. Both Depomed and Horizon had bid on the drug and it was info gleaned in that confidential process that Depomed alleged Horizon had improperly used to make its bid, the Wall Street Journal points out.

Horizon was hoping to broaden its portfolio beyond the orphan disease drugs it specializes in and thought Depomed's lineup of drugs for treating pain and central nervous system disorders would be the ticket. When Horizon went public with its takeover attempt in May, Walbert said his company had been trying since March to get Depomed to come to the table for friendly negotiations. But Depomed continued to resist and tension continued to build.

Horizon, which started out offering $29.25 per Depomed share, later hiked its proposal to $33 per share in a bid for some more polite deal talk. Depomed waved off the offer, arguing that it took "advantage of a temporary decrease in Depomed's stock price." It also initiated a poison pill defense and in August filed its attempt for a temporary injunction, claiming the misuse of insider info.

- read the Horizon announcement
- here's the Depomed statement
- more from WSJ (sub. req.)