The Hindu Business Line : Taro shareholders given time on Sun Pharma’s proposal

Shareholders of Israeli generic-drugs maker Taro Pharmaceuticals Industries Ltd have been given two more months to consider the $454 million acquisition-proposal on the table from Mumbai-based Sun Pharma, pushing the deal further away from a quick closure.

Taro decided to reschedule its shareholder meeting, originally scheduled for July 23 in Tel Aviv, Israel, to September 25, to allow shareholders “additional time” to fully consider the proposed transaction with Sun Pharma, the company said.

There may have been confusion in shareholders’ minds, the company said, given the public statements made by some large institutional Taro shareholders and their representatives, and the numerous court motions filed by them — all of which were rejected on July 20, 2007, by the Tel Aviv District Court.

Court’s rejection

“In addition to the Tel Aviv District Court’s rejection of all of their motions, including the motion to temporarily enjoin the shareholders meeting to approve the merger with Sun, Israel’s Supreme Court today also rejected their request on appeal for an injunction to prevent the shareholders meeting,” the note said.

Earlier in May, Sun Pharma had inked a deal with Taro, in what would have made it the second largest overseas acquisition by an Indian pharma company. But minority shareholders Franklin Advisers and Templeton queered the pitch on the deal, alleging discrimination against them. They hold a combined nine per cent in Taro.

Taro’s second largest shareholder, San-Diego-based Brandes Investment Partners is also reported to have expressed unhappiness with Sun Pharma’s offer price of $7.75 per share, stating that it was “too low”. Brandes holds about 11 per cent equity in Taro.

Meanwhile, Sun Pharma has informed Taro that it will exercise 30,00,000 previously issued warrants it holds, to purchase 30,00,000 shares of Taro at an exercise price of $6.00 per share, for an aggregate of $18 million in cash. This will provide additional liquidity for Taro and will be used for general corporate purposes, Sun Pharma said.

Q1 results

Sun Pharmaceutical clocked a 52 per cent growth in its net profit for the first quarter ended June 30, 2007, at Rs 225.39 crore (Rs 148.02 crore). Total income (net of excise) increased to Rs 747.60 crore (Rs 565.62 crore), the company told the BSE.

The Group posted a consolidated net profit after minority interest of Rs 227.20 crore (Rs 176.73 crore). Total income (net of excise) has increased to Rs 688.05 crore (Rs 538.57 crore).

Sun Pharma shares closed marginally up on the BSE, at Rs 986.90

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