Depomed Holder Horizon Pharma Files Solicitation Statement

filing: http://www.sec.gov/Archives/edgar/data/1005201/000119312515273905/d19540dpren14a.htm To the Fellow Shareholders of Depomed, Inc.: This solicitation statement (the "Solicitation Statement"), the enclosed form of Special Meeting Request attached as Exhibit A (the "Special Meeting Request Form"), the accompanying WHITE Proxy Card (the "WHITE Proxy Card") and the other exhibits to the Solicitation Statement are being furnished to you as a shareholder of Depomed, Inc., a California corporation (the "Company" or "Depomed"), by and on behalf of Horizon Pharma public limited company, an Irish public limited company, and its wholly owned subsidiary, Horizon Pharma, Inc., a Delaware corporation (the "Horizon Sub") (collectively unless context requires otherwise, "we," "our" or "Horizon"), for the purpose of soliciting revocable proxies from Company shareholders to empower us to deliver to the Company the Special Meeting Request Form on your behalf to call a special meeting of the Company's shareholders for the purposes described in the Solicitation Statement (the "Special Meeting"). Pursuant to the General Corporation Law of the California Corporations Code (the "CGCL") and the Company's Amended and Restated Bylaws, effective July 12, 2015 (the "Bylaws"), the holders of shares of Company Common Stock (as defined below) entitled to cast not less than 10% of the votes at the Special Meeting (the "Special Meeting Percentage") are entitled to call the Special Meeting, subject to the information and procedural requirements of Sections 2 and 5(d) of the Bylaws. As of August 3, 2015, the Horizon Sub was the holder of record and beneficial owner of 750,000 shares of Company Common Stock, representing approximately 1.25% of such shares that would be entitled to call the Special Meeting pursuant to the CGCL and the Bylaws if the Request Record Date (as defined below) had been set as May 8, 2015, based on 59,963,351 shares of Company Common Stock outstanding as of such date, the Company's most recent publicly available number of outstanding shares of Company Common Stock. On July 7, 2015, Horizon publicly proposed to acquire the Company in an all-stock transaction (the "Acquisition Proposal") for $29.25 per share of common stock, no par value, of the Company ("Company Common Stock"), with such consideration consisting of Horizon ordinary shares, no par value ("Horizon Ordinary Shares"). On July 21, 2015, Horizon revised 1 -------------------------------------------------------------------------------- the terms of the Acquisition Proposal to increase its offer to $33.00 per share of Company Common Stock, representing approximately a 60% premium to Company shareholders based on the closing per share price of Company Common Stock as of July 6, 2015, the last trading day prior to the first public announcement of the Acquisition Proposal. The Acquisition Proposal, at $33.00 per share of Company Common Stock, is valued at more than $3 billion on an enterprise basis. We firmly believe, but cannot assure, that a combination of Horizon and Depomed would yield significant revenue, operating and tax synergies, accelerated revenue and earnings growth and strong cash flow, as well as create substantial, immediate and long-term value for our and Depomed's shareholders. Despite our repeated attempts beginning in March 2015 to engage the Depomed board of directors (the "Board") and Depomed's management in friendly and confidential discussions, the Board and Depomed's management have refused to engage in discussions with us, have rejected our Acquisition Proposal and have even created new obstacles for shareholder consideration of the Acquisition Proposal by, among other things, amending the Bylaws to hinder Depomed shareholders' statutory right to call a special meeting and the process for shareholder proposal submission and adopting a shareholder rights plan, or so-called "poison pill," that precludes a party from acquiring the 10% of the votes of Depomed necessary to call a special shareholders meeting or privately soliciting up to ten (10) other shareholders for the purpose of calling a special meeting. While we have sought to comply in good faith with the onerous process for calling a special meeting of shareholders imposed by the Board, we also are challenging such process as contrary to California law in a judicial proceeding seeking to protect the Company shareholders' franchise rights. For additional background on the Acquisition Proposal, please see the section titled "Background and Past Contacts" in the Solicitation Statement below. For additional background on the foregoing litigation, please see the section titled "Litigation" in the Solicitation Statement below. We believe Depomed shareholders deserve to have a forum for expressing their views on the Acquisition Proposal and Depomed's refusal to engage with us. We are seeking your support to call the Special Meeting to hold a referendum on these matters. Accordingly, we are hereby asking you to help us request that Depomed call the Special Meeting for the following purposes: 1. to remove from office, without cause, the seven members of the current Board, constituting the entire current Board, Peter D. Staple, Vicente Anido, Jr., Karen A. Dawes, Louis J. Lavigne, Jr., Samuel R. Saks, James A. Schoeneck and David B. Zenoff, as well as any person or persons elected or appointed to the Board without shareholder approval after Depomed's 2015 Annual Meeting of Shareholders, and up to and including the date of the Special Meeting, each such removal to become effective upon the election of each successor by the shareholders of the Company; 2 -------------------------------------------------------------------------------- 2. to repeal the amendments to Sections 2 and 5 of the Bylaws adopted and approved by the Board on July 12, 2015 to remove the onerous requirements imposed thereby on the process for calling a special meeting of shareholders and for submitting shareholder proposals; and 3. to repeal any amendment or provision of the Bylaws adopted and approved by the Board that changes the Bylaws in any way from the version of the Bylaws adopted and approved by the Board on July 12, 2015 through the date of the Special Meeting, and to amend the section of the Bylaws entitled "AMENDMENT OF BYLAWS" to eliminate the power of the Board to adopt, amend or repeal the Bylaws from the date of the Special Meeting through 120 days following the Special Meeting (Proposals 1 through 3 above are collectively referred to as the "Proposals"). At this time, we are soliciting your revocable proxy to empower us to deliver the valid, executed and completed Special Meeting Request Form on your behalf to a designated officer of the Company to call the Special Meeting. We are not currently seeking your proxy, consent, authorization or agent designation for approval of any proposals or any other actions that would be considered at the Special Meeting. In the event the Special Meeting is called, we will send you proxy materials relating to a vote on the Proposals. For additional details on the Proposals, please see the section titled "Our Plans for the Special Meeting" in the Solicitation Statement below. Shareholder-Called Special Meeting Process Overview Generally, for Depomed shareholders to call the Special Meeting, (i) a shareholder must request that the Board set a record date for determining shareholders entitled to request the Special Meeting (the "Request Record Date") by sending written notice to the Secretary of the Company (the "Record Date Request Notice"), which date may be set as many as eighty-eight (88) days from the Secretary's receipt of such notice, and (ii) one or more written requests for the Special Meeting and signed by shareholders entitled as of the Request Record Date to cast not less than the Special Meeting Percentage must be submitted to and received by any designated officer of the Company within thirty (30) days of the Request Record Date. Once such written requests are received by a designated officer of the Company, the Company shall have five (5) business days to determine whether such submitting shareholders have satisfied the requirements under the Bylaws for calling the Special Meeting. In pursuing a forum for shareholders' views on the Acquisition Proposal and Depomed's refusal to engage with us, we have strived to comply in good faith with the foregoing special meeting process. In particular, the enclosed Special Meeting Request Form reflects our good faith effort to identify all the information required by the Bylaws in connection with shareholders' written request for the Special Meeting with respect to the Horizon Sub as the shareholder soliciting fellow shareholders to call such meeting. We expect that the Company will take actions seeking to frustrate the calling of the Special Meeting, including by claiming 3 -------------------------------------------------------------------------------- that the Special Meeting Request Form we are seeking to submit on your behalf does not comply with the Bylaws in an attempt to avoid or delay the call of the Special Meeting. We encourage you to submit your WHITE Proxy Card to permit us to submit the Special Meeting Request Form. We are challenging, among other things, the onerous special meeting process the Board has imposed, which we believe serves only to thwart shareholders' best interests and further entrench the Board and Depomed management and which is wholly inconsistent with California law, in a judicial proceeding, as discussed further in the section titled "Litigation" in the Solicitation Statement below. Acting in good faith, on August 3, 2015, the Horizon Sub submitted a Record Date Request Notice to Depomed as the holder of record and beneficial owner of 750,000 shares of Company Common Stock, representing approximately 1.25% of such shares that would be entitled to call the Special Meeting pursuant to the CGCL and the Bylaws if the Request Record Date had been set as of May 8, 2015, based on 59,963,351 shares of Company Common Stock outstanding as of such date. Horizon's Record Date Request Notice is attached as Exhibit C to the Solicitation Statement. Pursuant to the Bylaws, the Request Record Date has not yet been set by the Board. While we understand the Bylaws ostensibly permit the Board to set the Request Record Date as many as eighty-eight (88) days from the date of the Company's receipt of the Record Date Request Notice, Horizon has asked that the Board act promptly to set the Request Record Date as we believe that any delay in doing so comes at the expense of the franchise rights of the Company's shareholders and serves only to support the claim that such process was imposed by the Board primarily to entrench the Company's directors and management. Holders of record of shares of Company Common Stock as of that date will be entitled to submit a WHITE Proxy Card to permit us to submit the Special Meeting Request Form on their respective behalves to call the Special Meeting. As the next step in calling the Special Meeting, we are now soliciting revocable proxies from Company shareholders to empower us to deliver the Special Meeting Request Form on your behalf to call the Special Meeting. From the Request Record Date, we have thirty (30) days to solicit such revocable proxies and for the Company to be in receipt of the valid, executed and completed Special Meeting Request Form from the Horizon Sub and WHITE Proxy Cards from shareholders representing the Special Meeting Percentage together with Horizon's shares of Company Common Stock before a new Request Record Date must be requested from the Board and the process for a shareholder-called special meeting must be restarted. Please join us in requesting that Depomed call the Special Meeting and show the Board that shareholders want to have their voices heard. Why You Were Sent The Solicitation Statement As noted above, we have repeatedly attempted to convince the Board and Depomed management that the Acquisition Proposal is strategically and financially compelling for Depomed's and Horizon's shareholders. We sent Depomed management a letter on May 27, 2015, setting forth the Acquisition Proposal, which at the time represented approximately a 4 -------------------------------------------------------------------------------- 40% premium to Depomed's then-most recent closing trading price per share of Company Common Stock. Since sending that letter, we have repeatedly attempted to engage with the Board and Depomed's advisors as well as Depomed management, including by sending a follow-up offer letter on June 12, 2015, which reiterated the Acquisition Proposal and set out again the merits of the combination. Notwithstanding the follow-up letter, the Board, Depomed's advisors and Depomed's management continued to be unwilling to engage with us. In light of what we see as the clear benefits that would result from a combination of Horizon and Depomed, we were compelled to make the Acquisition Proposal known to Depomed's shareholders and publicly disclosed it on July 7, 2015 via a press release and open letter to Depomed management. Unfortunately, the Board and Depomed management again rejected the Acquisition Proposal, instead taking formal measures to hinder the shareholders' statutory right to consider the Acquisition Proposal by implementing onerous Bylaw amendments with respect to shareholder special meetings and shareholder proposals and by adopting a poison pill. To demonstrate our commitment to pursuing the combination, on July 21, 2015, we increased the value of the Acquisition Proposal to offer shareholders $33.00 per share in Horizon Ordinary Shares, representing an approximate 60% premium to the Depomed share price on the day prior to our original proposal being made public. However, despite this significant price increase, the Board and Depomed's management remain unwilling to meet or engage in any serious, meaningful discussions with us. Notwithstanding such refusal by the Board and Depomed management, we believe once you, the Depomed shareholders, are given the opportunity to review the Acquisition Proposal and understand its merits, you would support it. Moreover, we feel strongly that the Board, as currently constituted, does not provide assurance that the interests of Depomed shareholders are being sufficiently taken into account with respect to the Acquisition Proposal, especially in light of the onerous Bylaws adopted by the Board limiting shareholders' rights and the adoption of the poison pill. We believe that removal of the current Board, together with the proposed Bylaw amendments, are important steps for Depomed's shareholders to show their support for the Acquisition Proposal or any future business combination proposal made by Horizon. Summary Proxy Submission Procedures We are asking the Company's shareholders to complete, sign and date the accompanying WHITE Proxy Card so that the Horizon Sub may submit the Special Meeting Request Form and to return the WHITE Proxy Card in the enclosed envelope to MacKenzie Partners, Inc. ("MacKenzie Partners"), which is assisting us in this solicitation of proxies to call the Special Meeting, at the address set forth below. The Special Meeting Request Form that the Horizon Sub would submit on your behalf to the Company asks that the Special Meeting be held on a date and at a time to be specified by the Horizon Sub, as permitted under the CGCL and the Bylaws. Subject to the CGCL and the Bylaws, the WHITE Proxy Card grants the Horizon Sub the discretion to specify such date and such time as it deems appropriate in the Special Meeting Request Form. 5 -------------------------------------------------------------------------------- We ask that your executed WHITE Proxy Card be delivered as promptly as possible, by mail in the enclosed postage-paid envelope to MacKenzie Partners at the address below. If you have any questions about completing, executing and dating your WHITE Proxy Card or delivering the WHITE Proxy Card to MacKenzie Partners, or otherwise require assistance, please contact MacKenzie Partners at the address and telephone numbers below. We encourage you to submit your WHITE Proxy Card, even if you cannot complete your WHITE Proxy Card in full or you believe your WHITE Proxy Card may be defective; however, we reserve the right not to submit any WHITE Proxy Cards if we believe that they do not comply with the CGCL and the Bylaws. If we believe that your WHITE Proxy Card does not so comply, or the Company notifies us of such non-compliance, we expect to contact you. The Solicitation Statement is dated [—], 2015. The Solicitation Statement, the Special Meeting Request Form and the accompanying WHITE Proxy Card are first being sent or given to Depomed shareholders on or about [—], 2015. The WHITE Proxy Cards to submit the Special Meeting Request Form to call the Special Meeting should be delivered as promptly as possible, by mail (using the enclosed envelope), to Horizon's proxy solicitor, MacKenzie Partners, as set forth below. A copy of the Company's current Bylaws (which we are challenging in litigation) may be found on file with the Securities and Exchange Commission (the "SEC") as Exhibit 3.2 to the Current Report on Form 8-K filed by the Company on July 13, 2015. IMPORTANT Please complete, sign and date the enclosed WHITE Proxy Card as soon as possible. From the Request Record Date, we have thirty (30) days to solicit revocable proxies and for the Company to be in receipt of the valid, executed and completed Special Meeting Request Form from the Horizon Sub and WHITE Proxy Cards from shareholders representing the Special Meeting Percentage together with Horizon's shares of Company Common Stock before a new Request Record Date must be requested from the Board and the process for a shareholder-called special meeting must be restarted. If your shares of Company Common Stock are held in the name of a brokerage firm, bank nominee or other institution, only it can sign the WHITE Proxy Card with respect to your shares and only upon receipt of specific instructions from you. Accordingly, you should contact the person responsible for your account and give instructions for the WHITE Proxy Card to be signed representing your shares of Company Common Stock. We urge you to confirm in writing your instructions to the person responsible for your account and to provide a copy of such instructions to us in care of MacKenzie Partners to the address below, so that we will be aware of all instructions given and can attempt to ensure that such instructions are followed. 6 -------------------------------------------------------------------------------- If you have any questions about completing, executing and dating your WHITE Proxy Card, or delivering the document to MacKenzie Partners, or otherwise require assistance, please contact: MacKenzie Partners, Inc. 105 Madison Avenue New York, NY 10016 Email: proxy@mackenziepartners.com Call collect: (212) 929-5500 Call toll-free: (800) 322-2885 Please complete, sign and date the enclosed WHITE Proxy Card and return the document to MacKenzie Partners in the enclosed postage-paid envelope today.