"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.

"GMR pays $1.1 bn for 50percent in Dutch power firm"

In the largest acquisition of a global energy utility by an Indian company, GMR Infrastructure has bought 50 per cent in the Netherlands-based power generation company, InterGen NV for $1.1 billion (approximately Rs 4,694 crore).

InterGen, which operates 12 power plants in England, Mexico, the Netherlands and Australia, has 8,086 MW of operational capacity and about 5,000 Mw of assets under development. The company had a turnover of $1.65 billion with profits of $613 million for the year ended December 2007. It employs about 700 people at various locations.

Bangalore-headquartered GMR has interests in airports, energy, highways and urban infrastructure. GMR bought 50 per cent in InterGen from AIG Highstar, a private equity group. Ontario Teachers Pension Plan (Teachers), the largest single-profession pension plan in Canada, holds the balance 50 per cent equity stake in InterGen. The deal will be closed before December.

"We will fund the acquisition through a special purpose vehicle which will get a bridge loan of $1.1 billion with two-year maturity from a consortium of five Indian banks," said Ashutosh Agarwala, chief financial officer, GMR.

The acquisition will help GMR get access to the super-critical technology of InterGen's Australian operations and will help it qualify for the ultra mega power projects coming up in India, said company officials

"ADAG moves court to save MTN deal"

SAFE THAN SORRY

Group Cos File Caveats To Stop RIL From Blocking Transaction


THE war of words between the Ambani brothers over RCom’s proposed reverse merger with MTN may now reach the courts. Two companies of the Anil Dhirubhai Ambani Group (ADAG) have filed caveats in the Bombay High Court, which are intended to ensure that no ex-parte order was issued in case Mukesh Ambani’s flagship Reliance Industries (RIL) attempts to enforce its claimed first right of refusal in case of the MTN deal. Sources close to the development said Reliance Communications (RCom), which is in talks with MTN to create one of the world’s top telecom companies, and another company AAA Communications have filed the caveats in the Bombay High Court last week. ADAG’s investment arm AAA Communications holds 63% stake out of the group’s 66% stake in RCom.

The bone of contention between the Ambani brothers lies in RIL’s claim that it holds the right of first refusal in case RCom is sold to any third party. RCom denies any such right. RIL sources say that ADAG has repeatedly sought to enforce this right in case of various initiatives by RIL and by Mukesh Ambani and his associates.

Although MTN has maintained that the sibling rivalry between the Ambani brothers will not have any impact on its talks with RCom, experts said the deal may face the threat of getting delayed by legal proceedings. “This threat may have an impact on the share-swap ratio,” said a source, adding that MTN is now scrutinising the legal implication of RIL’s claim. However, this could not be independently verified with MTN.

It is learnt
that Anil Ambani is expected to visit London to give final touches to the proposed deal. Ken Kosta, Lazard’s head of Europe, is leading the ADAG effort on this deal from his London office. If the deal goes through, it will create a telecom company with a combined subscribers of 115 millions in Asia, Africa and the Middle East. The broad contours of the deal being discussed between the South African telco MTN and RCom indicate the ADAG will emerge as the largest shareholder of the Johannesburg-based MTN, while RCom will become the subsidiary of MTN. If the deal goes through, ADAG is expected to get nearly one-third stake in MTN by swapping his shareholding in RCom. He may chip in a few billion dollars to top up his offer, depending on the share-swap ratio between the two companies. Ambanis square off yet again

THE exact details of the deal have not yet been finalised. Both the parties have signed an agreement to hold ‘exclusive talks’ till July 8.

The animosity between the Ambani brothers is nothing new. They parted ways in June 2005 after one of the prolonged and most bitter battles in the history of corporate India. Since then, both the brothers have grown their business manifold and have displayed a habit of obstructing each other’s expansion plans. RIL sources claim that this propensity has mostly been exhibited by ADAG which has repeatedly objected to various initiatives.

However, this round of battle was initiated by RIL, which two weeks ago sent a letter to MTN claiming that it enjoys the first right of refusal in case RCom is sold. RIL’s claims are based on a disputed agreement with three entities of ADAG on January 2006. RIL had also sent the same letter to RCom a day later. The January 2006 agreement was to implement the demerger of businesses between the brothers.

RCom immediately come down heavily on RIL. In a communication, which was public within a day after getting the RIL’s letter, RCom had said: “ The tone of the letter clearly indicates that it is part of a mala fide design, with no substance, to simply try and disrupt talks between RCom and MTN, by raising the false bogey of litigation and damages. The use of threatening and coercive language by RIL, India’s largest private company, with MTN, a globally respected telecom major, is very unfortunate.”

RIL had earlier said: “It has in good faith notified both ADAG and MTN of the stipulations contained in an agreement, the validity of which has never been questioned so far by ADAG.”