The likelihood that the Taro Pharmaceutical Industries Ltd. (Pink Sheets: TAROF.PK) general shareholders meeting on July 23 will approve the sale of the company to India’s Sun Pharmaceutical Industries Ltd. (BSE: 524715) appears to be diminishing.
The roll call of opponents to the deal is growing. It includes Templeton Resources Inc. (NYSE:BEN), which owns 9.5% of Taro; Brandes Investment Partners LP, which owns 10.8%; and now Analyst IMS Investment Management Services Ltd. (TASE:ANLT), which owns 1.3% of Taro has joined them.
Sources inform ''Globes'' that another Taro investor, Harel Insurance Investments Ltd. (TASE: HARL), has not yet decided how it will vote, but is leaning toward voting against the merger. Harel’s stake in Taro is about the same size as Analyst’s, and it is also a bondholder. Harel declined to comment on the report; Analyst confirmed its decision to oppose the sale.
Meanwhile, Templeton continues to express it dissatisfaction with the conduct of Taro’s management. Templeton Emerging Markets Fund president Dr. Mark Mobius yesterday sent a letter to Taro chairman Dr. Barry Levitt, in which he noted the legal action that Templeton has taken in Israel to prevent the erosion of the rights of Taro’s minority shareholders. He added that Templeton was urging Taro’s directors, managers, advisors, and other persons to cancel the merger with Sun Pharmaceuticals and the stock allocation which diluted shareholders’ stakes.
In the letter, Mobius called on Levitt to disclose critical information about Taro’s financial circumstances, and not to share this information only with family members and Sun’s advisors.
Mobius concluded his letter by saying that Templeton is prepared to consider providing Taro with the necessary funding, after conducting due diligence, to help the company avoid insolvency.
Analyst Exchange and Trading Services managing director Shai Vodovoz said, “We feel that the price tag for the deal is too low. As partners in Taro, which is how we see ourselves, we’re not getting answers from them.”
Vodovoz declined to say whether Analyst’s opposition to the deal was based on the losses from its investment in Taro, or how much the company had lost, merely saying, “We have no complaints against them on this point. It isn't a question if we lost 5% or 10%. The problem is this deal, which we think is unfair.”
The activism of Analyst and other Taro investors is definitely worth noting. Whether it is justified or not, it shows a welcome development in the Israeli capital market that institutional investors are expressing opinions about companies’ management.
Published by Globes [online], Israel business news - www.globes.co.il - on July 12, 2007
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