Sun Pharma?s plan to acquire all the shares held by the promoters of Taro Pharmaceuticals is likely to hit another roadblock. Taro had told a Tel Aviv court that Sun Pharma?s tender offer to purchase the shares must comply with the special tender offer rules under Israeli law. As per Israeli law, the tender offer to purchase the shares will be accepted only if at least half the shareholders agree to sell their shares at the offer price. In effect, Taro?s demand for a tender offer that complies with Israeli law is meant to prevent Sun Pharma from acquiring the promoters? stake in Taro.
Last month, Taro had filed an action with the Tel Aviv District Court, seeking a declaratory ruling that should Sun pursue a tender offer to purchase Taro shares under the terms of an option letter agreement executed concurrently with the merger agreement, it must comply with the special tender offer rules under Israeli law, which are meant to protect minority shareholders.
On a query what options Sun Pharma would explore if the Israeli court agrees with Taro?s demand, a Sun Pharma spokesperson told FE, ?In all situations, we will comply with the law and directions of the court.?
In a statement dated May 28, Barrie Levitt, chairman, Taro, had said, ?The company?s lawsuit asks that Sun be precluded from acquiring shares pursuant to the option letter agreement unless it first complies with the Israeli special tender offer rules.?
The option letter agreement gives Sun the option, exercisable for 30 days following termination of the merger agreement, to purchase substantially all Taro shares owned or controlled by the members of the Levitt and Moros families at $7.75 a share, subject to certain conditions, including that Sun make a tender offer to remaining shareholders, he added.
Executing its right under the terms of the option letter agreement, Dilip Shanghvi, chairman & MD, Sun Pharma, had on Wednesday announced that Sun is exercising the option to acquire all shares held by the controlling shareholders of Taro Pharmaceuticals.