The Hindu Business Line : Irish twist to Sun Pharma-Taro tussle

Mumbai, June 5 Israeli drug-maker Taro’s indication that it plans to sell its Irish plant has become the latest flash-point in the ongoing public spat between the company and Sun Pharmaceuticals.

Taro knows that Sun views the Irish facilities as having strategic importance and any plan by Taro’s board of directors to divest the Irish facilities is part of a concerted effort to discourage Sun from pursuing its rights to acquire Taro, said Sun Pharma in a letter from its Chairman and Managing Director, Mr Dilip Shanghvi to the Taro chief.

Sun Pharma is at present evaluating its options after Taro recently terminated its $454-million merger deal that had been formalised a year ago.

“Sun vigorously disputes the termination of the Merger Agreement by Taro and will not stand by idly if Taro pursues actions contrary to the spirit of the Merger Agreement that strip the company of assets of strategic importance to the company’s future operations and that Sun would otherwise have had the opportunity to preserve and subsequently develop had the Merger Agreement not been wrongfully terminated,” the letter said.

‘Question motives’

The Irish operations represent significant future business opportunity for Taro, its shareholders should question the motive behind some Taro board members wanting to divest the Irish facilities or any other assets of the company in the current circumstances, the letter said. Especially so, if the buyers are close to Taro’s senior management, it added.

Besides being strategic and synergistic to the merger, Taro’s Irish facility has the potential to produce substantial revenues for Taro in the future and any sale now is premature, Sun Pharma said. Adding to the Irish operations’ significance is the number of injectable products which have been approved, or are in the process for approval, by the Irish authorities, and the access this provides to Europe, the note added.

Taro’s Irish operations have been loss-making since the Roscrea facility was acquired in March 2003.

In fact, at no point in time during the financial crisis that precipitated the entry of the Merger Agreement, did Taro identify the disposal of the Irish facility as a measure to ease liquidity despite the monthly operating costs related to those operations, the note said.

Scrutiny likely

Sun Pharma said that any such transaction by Taro would be scrutinised and Sun would hold Taro’s directors liable for any breach in the agreement, it said, adding that it was prepared to publicize the issue in Irish newspapers to notify potential buyers.

Sun Pharma shares closed up over six per cent at Rs 1,453.70 on the BSE.