Taro rejects full control by Sun Pharma

Written by fe Bureau | Mumbai | Updated: Jul 20 2012, 09:08am hrs
Sun Pharmas move to take full control of Israels Taro Pharmaceutical Industries has hit a roadblock. Taro said on Thursday that a special committee of its board of directors has unanimously rejected a non-binding offer from Sun Pharma to purchase all the outstanding shares of Taro not currently held by Sun Pharma for $24.50 per share. The offer, made on October 18, 2011, was rejected as it was inadequate and not in the best interests of Taros minority shareholders, Taro said in a statement. Sun Pharma currently holds 66.7% in Taro.

It could not be immediately ascertained if Sun Pharma would sweeten its offer. A company spokesperson said it has no comments to offer on the Taro statement. Sun Pharma shares were marginally up to close at R626.20 each on the BSE on Thursday. The Taro announcement came after market hours.

The special committee reached its conclusion after careful consideration, including a thorough review of Taros business and prospects with its independent financial advisor Citigroup Global Markets, and its independent legal counsel Goldfarb Seligman & Co as its Israeli legal counsel and Willkie Farr & Gallagher, as its US legal counsel, the statement from Taro added.

Taros better performance of late had made minority shareholders like Raging Capital, Grand Slam Asset Management and Guardian Point Capital clamour for a better offer price from Sun Pharma. For the fourth quarter ended March 2012, Sun Pharma posted an 85% growth in net profit, rising on the performance of Taro, whose sales and net profit nearly doubled.

While Raging Capital reportedly asked for $106.91 a share, Grand Slam Asset Management had demanded a price of $48 per share.

In September 2010, Sun Pharma, which got an order in its favour from the Israeli supreme court allowing it to buy all the outstanding promoters share in Taro, said it has picked up a controlling stake in Taro. Suns chairman & managing director Dilip Shanghvi was then appointed as chairman of the Taro board.

It was earlier estimated that Sun Pharma would have to invest around $350 million to $370 million for around 15 million outstanding shares in Taro to become 100% owners.

Following the Supreme Court verdict, Sun, through its subsidiary Alkaloida Chemical Company, had made a fresh tender offer to Taro shareholders for acquiring its all outstanding ordinary shares.

Taro has factories in Canada and Israel that manufacture topical creams and ointments, liquids, capsules and tablets dosage forms which complements Suns current manufacturing and development capabilities for the US.

Sun Pharma has been trying to take control of Taro ever since its $454 million merger deal of 2007 was unilaterally terminated by the Israeli firm in 2008, citing under-valuation.