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Starboard Value Letter To Depomed

Starboard Value LP (together with its affiliates, "Starboard"), one of the largest shareholders of Depomed, Inc. (NASDAQ:DEPO) with an ownership interest in approximately 9.9% of Depomed's outstanding shares, Wednesday announced it has delivered an open letter to Depomed shareholders.

The full text of the letter follows:

July 26, 2016

Dear Fellow Shareholders,

Starboard Value LP, together with its affiliates ("Starboard") and director nominees, currently owns approximately 9.9% of the outstanding shares of Depomed, Inc. ("Depomed" or the "Company"), making us one of the Company's largest shareholders. We believe that Depomed is deeply undervalued and significant opportunities exist within the control of management and the Board of Directors (the "Board") to unlock substantial value for the benefit of all shareholders.

As we outlined in our May 26th letter to Depomed shareholders, we delivered a written request to Depomed, in accordance with its Bylaws, that the Board set a record date (the "Record Date Request Notice") for determining the shareholders entitled to call a special meeting of shareholders (the "Special Meeting") for purposes of seeking to remove and replace the current Board. This Record Date Request Notice superseded our initial request delivered to Depomed, dated April 7, 2016 (the "Initial Record Date Request Notice"). As you may recall, the Initial Record Date Request Notice was delivered to Depomed in order to preserve our rights to call a special meeting under California law and mitigate the risk that Depomed would seek to further amend its governance provisions to suppress shareholder rights. Given the Board's disturbing history of taking actions aimed at limiting shareholder rights, we simply could not afford to take any risks.

We continue to have significant concerns regarding serious corporate governance deficiencies, questionable capital allocation decisions, and actions taken by the Board to stymie strategic interest in acquiring Depomed. We believe the Board clearly lacks the independence, objectivity, and perspective needed to make decisions that are in the best interests of shareholders.

Following our initial evaluation of well over 100 qualified potential board candidates, we have continued to meet with numerous pharmaceutical executives to supplement our slate with additional pharmaceutical experience. Unfortunately, given the extensive requirements and restrictions under the Depomed Bylaws for calling the Special Meeting, the addition of any new, highly qualified nominees to our slate at this time would effectively require us to submit a new record date request notice to Depomed, thereby restarting the clock under the Bylaws for the Special Meeting and further delaying our efforts to remove and replace the Board. Further delay is unpalatable; therefore, we have instead appointed two exceptionally qualified former senior pharmaceutical executives - Robert G. Savage and James L. Tyree - as advisors to assist in our solicitation efforts given their significant industry knowledge and experience. If our Special Meeting solicitation ultimately proves successful, we would invite Messrs. Savage and Tyree to join the Board, and they have indicated their desire to do so.

As a brief background, Mr. Savage was the former Worldwide Chairman for the Pharmaceuticals Group at Johnson & Johnson where he was responsible for one of the world's largest pharmaceutical organizations with annual sales of almost $15 billion in 2001. Mr. Tyree was the former Executive Vice President, Pharmaceutical Products at Abbott Laboratories with annual Pharmaceutical Products division sales of almost $20 billion in 2010. We are confident that you will find Messrs. Savage and Tyree to be incredibly well-qualified to serve as directors of Depomed given their extensive experience as senior executives of multi-billion dollar pharmaceutical divisions at two of the world's largest and most well-respected healthcare companies. They supplement what we already believe to be an exceptional slate of Board nominees who collectively possess a proven track record of corporate governance best practices and shareholder value creation. We believe that, together, our advisors and current Board nominees would create an all-star Board that would work diligently and collaboratively to protect and represent the best interests of shareholders.

In addition, in order to maintain a degree of continuity amidst the required change that we believe is desperately needed at Depomed, in the event that the current Board is removed and our nominees are elected at the Special Meeting, the new Board would be willing to increase the size of the Board to nine members (currently there are six members; adding Mr. Savage and Mr. Tyree would expand the Board to eight members) and add back one incumbent director. As a reminder, we utilized this construct successfully at Darden Restaurants where we...


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