The Hindu Business Line : Taro can’t terminate merger: Sun Pharma

Mumbai, May 29 “Taro is not entitled to terminate the merger as per our agreement,” said Mr Dilip Shanghvi, Chairman and Managing Director of Sun Pharmaceutical, a day after the Israeli drug company terminated the $454-million merger agreement with Sun Pharma.

Sun Pharma will now consider all of its options, including starting legal proceedings on Taro’s right to terminate the agreement, Sun’s Mr Sanghvi said, in a strongly worded letter to Taro’s Chairman, Mr Barrie Levitt.

Taro had said on Wednesday that its board of directors had unanimously voted to terminate the merger agreement formalised with Sun Pharma a year ago.

The board was of the opinion that the deal was not in the best interest of the company and Sun Pharma’s revised offer of $10.25 offer was “financially inadequate”, Taro had said.

Rebutting Taro’s statement, Mr Sanghvi said that he was “skeptical” of Taro’s turnaround. “Taro has only $47 million in cash as of March 31, 2008. This means that, if not for Sun’s cash injections of approximately $60 million last year, Taro would have virtually negative cash - hardly the “dramatic” improvement Taro has boasted of .”

Sun Pharma has made every effort to fulfill its obligations under the agreement, Taro has failed to honour its side of the bargain, it alleged.

“We continue to believe that a merger with Sun Pharma at $10.25 per share that we have offered to recommend to Sun Pharma’s board is in the best interests of all Taro shareholders,” he said, indicating that the first resort would be to resolving the public spat through discussions.

The Sun Pharma scrip was down five per cent, at Rs 1,388.55 on the BSE.