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Wednesday, Jan 07, 2009
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Business Daily from THE HINDU group of publications Wednesday, Jan 07, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Pharmaceuticals Corporate - Mergers & Acquisitions
P.T. Jyothi Datta Mumbai, Jan. 6 All chances of an out-of court settlement between Sun Pharma and Israeli drug-maker Taro Pharma seem to be diminishing, with even reconciliatory efforts ending in acrimony. By suggesting a shareholder referendum, Taro’s management was “helping the Levitt/Moros families (current promoters of Taro) to sidestep the Option Agreement,” a Sun Pharma official told Business Line, responding to Taro’s rejection of its olive branch. “Under the Option Agreement signed at the same time as the original Merger Agreement, these families are bound to sell their shares to Sun Pharma, irrespective of the outcome of the shareholders’ vote on the merger proposal,” the official added. Taro had on Monday rejected the two amended proposals that Sun Pharma had put on the table in its effort to settle the issue outside the courts, as suggested by the Israeli Supreme Court. Both companies will revert to the Israeli Supreme Court by later this week, saying that an outside settlement seems unlikely. The court could extend the deadline or start writing its judgment, said an analyst tracking the development. Incidentally, he added, the lower court had earlier ruled in favour of Sun Pharma. Last August, the Tel-Aviv District Court rejected Taro’s contention that Sun should conduct a ‘special tender offer’ under Israeli law. The genesis of the public spat between the two companies was after Taro unilaterally terminated Sun Pharma’s $454-million proposal to acquire it, a year after the deal was formalised in 2007 and subsequently the transaction went into litigation in Israel and the US. The deal has been pending for 19 months now, the analyst pointed out. But since Taro’s counter offer does not mention a price point, Sun Pharma was sure not to bite the bait, he added. In fact, the Sun Pharma official said that they were keen on a merger and one of their revised options was about a merger. It is the Taro board that did not conduct a shareholders’ meeting for this purpose and in May 2008 terminated the merger agreement, the official added. Price issuesSun Pharma had agreed to amend the merger agreement and increase its offer price to $9.50 a share, giving it 100 per cent control in Taro. The original offer price was at $7.75 a share. In its second proposal to Taro, Sun Pharma raised its tender offer price to $9 a share for all non-Levitt shareholders. Through this option, Sun’s share in Taro would see an increase. Sun Pharma at present holds 36 per cent in Taro, while the Levitt/Moros family holds 12 per cent. Taro rebuffs Sun’s revised proposals Sun gets favourable ruling in battle for Taro More Stories on : Pharmaceuticals | Mergers & Acquisitions | Overseas Investments | Sun Pharmaceutical Industries Ltd
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