Sun Pharma, which is in a dilemma following Taro Pharma?s decision to call off the merger deal, will see the deal getting dearer if both the companies agree to the new price of $10.25 per share that the former had proposed. un Pharma will have to shell out a minimum $75 million, over and above the original price, to close the deal on the new valuation of $10.25 per share, as per statistics. Earlier, Sun had offered a price of $7.75 per share to acquire 100% stake in Taro for $454 million.
Although Sun has said they will consider a price of $10.25 a share, Taro, in its recent letter, had spurned the offer, citing it was financially inadequate. Sun had acquired 34% of Taro with price of $6 per share for 9.8 million shares (24%) and $10.25 per share for 3.7 million (10%) from Brandes. The merger agreement, based on $7.75 per share, allowed either party to terminate the deal after December 31, 2007. Meanwhile, Barrie Levitt, chairman, Taro is learnt to have responded to the mail sent by Dilip Shangvi, chairman & MD, Sun Pharma, last week. However, the content could not be ascertained.
An analyst said, ?The deal will be settled amicably if the board of directors of Taro agrees to pay $10.25 per share, as Sun has said they will consider the price. However, chances are slim for Sun to agree to higher price. If Taro doesn?t agree to this price, Sun has the option to move to the court.?
The announcement of the termination of the deal has reflected in the share prices of both the companies. On Monday, Sun Pharma shares went up Rs 43.90 to close at Rs 1,446.80. The price of Taro?s shares went up to $8.75 on May 28 on the Nasdaq stock market, following its announcement of terminating the deal with Sun Pharma.
If the deal went through following an additional investment of $75 million, it will be the second largest outbound deal an Indian pharma firm signed following Dr Reddy?s buyout of German generic firm Betapharm for $570 million.