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Depomed gives Starboard chance for meeting to replace board

Depomed is taking another step to avoid the pain of a protracted fight with activist investor Starboard Value over control of the drugmaker.

The pharmaceutical company said Monday that its board has amended its shareholder rights plan, which allows Starboard to immediately submit its request for a special meeting. Starboard has said it wants that meeting so it can replace Depomed’s board.

Starboard holds a nearly 10 per cent stake in Depomed, which it targeted earlier this month for its latest boardroom coup attempt. It has accused the drugmaker’s board members of being more concerned with enriching themselves than improving shareholder value.

Newark, California-based Depomed, whose product portfolio includes the painkiller Nucynta and the migraine drug Cambia, has said that its board is focused on creating value for all shareholders.

Starboard has been particularly incensed by a Depomed plan to reincorporate in Delaware and by its rejection of acquisition attempts by Horizon Pharma Plc.

Depomed said earlier this month that it would drop the proposed reincorporation because it would lead to a “costly and distracting proxy contest” while the company tries to grow.

It also said Monday that it has settled litigation with Horizon Pharma. Terms of that deal are confidential, but Depomed did say that Horizon cannot start another unsolicited takeover bid until 2020.

Starboard now has 30 days to submit a request for a special meeting signed by holders of 10 per cent or more of the company’s shares as of April 26, according to Depomed.

Starboard also is leading a shareholder mutiny at Yahoo and in 2014 successfully ousted the board at Olive Garden owner Darden Restaurants Inc.

Shares of Depomed Inc. climbed 8 cents to $17.62 Monday morning, while broader indexes slipped at the start of trading.