Drug maker Sun Pharma will have to wait longer to take total control in its Israeli subsidiary Taro Pharmaceutical Industries.

Taro had said, on Thursday, that a Special Committee of its board of directors had unanimously rejected last October’s “unsolicited, non-binding” offer from Sun Pharmaceutical Industries Ltd.

Sun and its affiliates had proposed to purchase all of the issued and outstanding shares of Taro not currently held by Sun Pharma for $24.50 a share. At the time of the proposal, Sun had said that the price was at a 25.96 per cent premium over the most recent closing of Taro's common stock.

The special committee, though, rejected the offer as it was “inadequate and not in the best interests of Taro’s minority shareholders,” Taro said, indicating that Taro’s financial performance had improved since. Taro’s present share price hovers around $36 a share, and a section of minority shareholders are asking for $48 a share.

In 2007, Sun had made a $454-million proposal to acquire Taro — a deal that was sealed after the two companies fought a long and cross-country battle.

The Special Committee reached its conclusion, including a thorough review of Taro’s business and prospects with its independent financial advisor Citigroup Global Markets Inc, and its independent legal counsel Goldfarb Seligman & Co as its Israeli legal counsel and Willkie Farr & Gallagher LLP, as its US legal counsel, Taro said.

Sun control

Sun Pharma holds about 66 per cent in Taro, and Sun’s top management have in the past stuck to their guns, maintaining that the company would follow the “rigid” process in place in the US and Israel to protect minority shareholders.

Whether or not Sun sweetens the deal for Taro’s minority shareholders, industry watchers observe, Sun already has management control in Taro and there is no reason for it worry on that count.

Besides, waiting it out is something Sun does well. Sun took total control of its US subsidiary Caraco last year, having initially picked up stake in it in 1997 as part of a technology-for-equity agreement.

Sun Pharma shares were marginally down at Rs 625 on the BSE, on Friday.

jyothi@thehindu.co.in

(This article was published on July 20, 2012)
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