The Hindu Business Line : Sun Pharma to push bid for Taro

Mumbai, June 26 Sun Pharma has decided to push through with a hostile bid and acquire the equity of controlling shareholders in Israeli drug-maker Taro, after the latter had unilaterally terminated Sun’s $454-million proposal in May this year.

Sun Pharma has filed a suit against the entire Taro board of directors in the Supreme Court of New York for fraud, urging the court to order Taro that the terms of the Option Agreement be followed.

June crucial

Time was running out for Sun Pharma, as it had to act within a month of the termination by Taro. Sun said on Thursday that its subsidiary has exercised the option under its Option Agreement to acquire all the shares held by the controlling shareholders of Taro Pharmaceuticals Industries Ltd.

Sun Pharma at present holds about 36 per cent in Taro and by exercising its option, it would get 12 per cent of the economic share, taking its share up to 48 per cent. Sun Pharma’s voting shares would go up to 65 per cent, an official familiar with the development told Business Line. Sun Pharma, though, will not for now exercise the 3.7 million warrants that it has, the official said.

The shares of the promoters and associates would be purchased at $7.75 a share, the same price at which it sealed the deal. Over the next few days, Sun Pharma will also start a tender offer for all ordinary shares as required by the agreement. Sun Pharma clarifies that the agreement outlines the tender offer price at $7.75 a share.

There was speculation that Sun Pharma may go in for the tender offer at $10.25 a share, the priced paid to win over one of the unhappy minority shareholders, Brandes Investment Partners. The Taro deal had run into rough weather from the beginning, with minority shareholders Templeton and Brandes being unhappy with the price being offered for the acquisition.

Termination

Taro had terminated Sun Pharma’s proposal to acquire it, a year after the original deal had been forged. Sun Pharma has, however, maintained that Taro was not entitled to terminate the agreement.

And ever since, the two have been having a very public battle, through open letters addressed between the heads of the respective companies. The latest sparring point was Taro’s intention to put its Irish facility on the block, and this irked Sun Pharma who saw strategic importance in the facility.

Hauled to Court

In the action filed by Sun Pharma against Taro’s board, the Mumbai-based drug company has also asked the NY Court for an order that the merger agreement was not terminated properly.

Meanwhile, Mr Dilip Shanghvi, Chairman and Managing Director, said that the company had enough of the delays, excuses and misrepresentation by Taro’s board. Sun Pharma had complied with its obligations under the merger agreement approved by Taro’s board and is now complying with the terms of the option agreement signed by Dr Levitt and his family.

Now it is time for Dr Levitt and family to do what is required of them under the option agreement, he said. “We will do everything required to preserve our rights,” the statement said.

Sun Pharma shares were up 3 per cent, at Rs 1,342.60, on the BSE.