Activist hedge fund targets Depomed board
- Although CA-based Depomed was able stave off a $3 billion takeover attempt from Horizon Pharma last year, the drugmaker faces a new challenge from the activist hedge fund Starboard Value. Starboard, which owns nearly 10% of Depomed, wants six seats on the company's board given a "troubling record" of actions unfriendly to shareholders, the hedge fund said in a letter.
- In the letter, Starboard accused Depomed of adding reincorporation documents to avert takeover efforts, according to a report from Fierce Pharma.
- Starboard has successfully ousted entrenched boards in the past, including removing the entire board of Darden Restaurants in 2014.
Horizon Pharma had aimed to acquire Depomed's portfolio of drugs for pain and central nervous system disorders to complement its portfolio of orphan drugs. For months, Horizon pursued Depomed, going directly to shareholders with an offer of $29.25 per share—a premium of 42%.
But Depomed defended itself vigorously and Horizon eventually gave up. Now, however, Depomed stock has fallen to less than $17 per share, down from over $30 last summer.
According to Starboard Value, Depomed has taken a number of step to improve its defense against takeovers or board changes. It alleges the actions are not fair to investors and not in line with the standard best practices.
Depomed has stringent requirements for a company takeover, including requiring 25% of shareholders to approve a special meeting to vote on the deal—up from 10% previously.
In response to Starboard's allegations, Depomed has said it values open communications with shareholders and is committed to creating shareholder value.
"Depomed notes that Starboard has not communicated with the Company prior to filing the 13D and has not attempted to hold any discussions with the Company. Depomed's Board and management are committed to creating value for allDepomed shareholders," the company said further.