Israel court rules in favour of Sun Pharma on Taro open offer

Written by Corporate Bureau | Mumbai, Aug 27 | Updated: Aug 28 2008, 05:35am hrs
Sun Pharmaceuticals, which is locked in a bitter takeover battle with Israels Taro, has received a shot in the arm, with a Tel Aviv court ruling that a special tender offer was not necessary in the formers bid to acquire all outstanding shares of the latter. Earlier, Taro had asked the court to order Sun Pharma to conduct special tender offer under Israeli Law, but this has now been turned down.

Last month, the Mumbai-based firm had launched an open offer at a price of $7.75% to acquire all outstanding shares of Taro, including all of the founders shares. However, Taro directors had claimed that a special tender offer is necessary and filed a lawsuit with the Israeli court.

A Sun Pharma statement said, We would be in a position to complete the previously announced tender offer by its subsidiary, Alkaloida Chemical Company Exclusive Group Ltd (Alkaloida). The open offer, which opened on June 30, would now expire on September 3, instead of September 2, it added. The court stated that the directors should have studied the agreements prior to their being signed, and should have confirmed then that they were in the companys best interest. The court stated that the directors cannot claim now that they suddenly decided a special tender offer is necessary, it added. On Wednesday, Sun Pharma shares were down by Rs 7.90 or 0.53% to close at Rs 1,481.65 on the Bombay Stock Exchange.

Dilip Shanghvi, chairman and managing director, Sun Pharma said, It is clear based on Tuesdays ruling that the lawsuit by Taros independent directors was part of a calculated effort by Barry Levitt to avoid living up to his obligations under the option agreement. With respect to those directors who are also shareholders, the court stated that these shareholders benefited from Suns investment, which basically saved Taro from collapse.

Further, Sun Pharma will file an amendment to the previously announced tender offer which provides for the waiver of certain conditions in the offer.

The Mumbai-based firm in May 2007 offered to buy Taro for $230 million in cash and an additional $224 million to refinance debt. Under the agreement, Sun has the right to buy all Taro shares owned or controlled by the Levitt and Moros families at $7.75 per share and offer to buy the remaining stock at the same price. Taro said it rejected a revised $10.25 a share offer from Sun as inadequate, given the improvement in Taros operations.