"SUN PHARMA LOOKS TO POP UP TARO BY FORCE"

UPPING ANTE FILES SUIT IN NY
SUN PHARMA LOOKS TO POP UP TARO BY FORCE

SUN Pharmaceutical Industries, the country’s most valuable drug maker, has decided to launch a hostile bid for Israel’s Taro Pharmaceutical Industries. The is a rare instance of an Indian company making an unsolicited bid for a foreign firm. The move follows Taro’s rejection of a merger agreement with Sun last month. Taro had termed the offer “inadequate.” Sun said on Thursday that it will offer to purchase all outstanding shares of Taro in the next few days at $7.75 a share, the rate that both companies had agreed a year ago. Sun, which already holds a 36% stake in Taro, also said the offer is in line with the 2007 merger agreement between the two companies. Under that accord, Taro’s controlling shareholders, led by chairman Barrie Levitt, granted Sun the option to acquire all its shares if the merger fails. Sun has filed a lawsuit in the supreme court of the state of New York against Taro and its board of directors, requesting the court to order the controlling shareholders to honour the 2007 merger agreement. “We have had enough of the delays, excuses and misrepresentation by the board of Taro and Mr Levitt. Now it is time for Mr Levitt and his family to do what is required of them under the option agreement. We will do everything required to preserve our rights,” said Sun Pharmaceutical chairman Dilip Sanghvi. The successful acquisition of Taro will help Sun expand its marketing reach in the US where demand for generics continues to grow as health-care costs surge and more blockbuster drugs go off patent.

In May 2007, the Indian drugmaker offered to buy Taro for $7.75 per share and an additional $224 million to refinance debt, totalling $230 million in cash.

DEAL GOES BUST

Sun will offer to buy outstanding Taro shares at $7.75 a share. Says offer in line with 2007 merger pact

Indian co has also filed suit in New York against Taro and its board
Taro called off merger in May; said revised $10.25/share offer meagre

MAY 2007

Sun Pharma enters into a merger deal with Taro

MAY 2008
Sun receives Taro’s notice to terminate the agreement on difference of valuations

JUNE 2008

Sun replies to Taro disagreeing the termination

Legal battle kicks off between the two over the sale of Taro’s Irish plant

Sun files case in New York court against Taro Taro sought revised offer

SUN has given Taro $60 million in cash to revive the company and subsequently raised the offer to $10.25 a share. The Taro promoters and financial institutions having a combined 22% stake rejected the merger agreement with Sun Pharmaceutical last month, citing the domestic firm’s revised $10.25 a share offer as inadequate given the improvement in Taro’s operations. It had also filed a lawsuit in Israel on May 28 seeking to force Sun to make a revised offer. Sun refuses to do this.

“My sense of it is that the legal issues make it complex. While the litigation continues it will be difficult for Sun to get the shares from Taro’s promoters. I think that Sun filed the action to abide by the agreement. It exercised its option to be on the right side of the law. I don’t think it is going to be able to acquire the shares anytime soon.” Amod Karanjikar, an analyst with Edelweiss said.

Taro filed an injunction in the Tel-Aviv district court seeking to overrule the options agreement on May 28.