Taro Pharmaceutical Industries Ltd. (Pink Sheets: TAROF) has hired US investment bank Guggenheim Securities LLC to find buyers for the company in the latest action in the three-year struggle for control between Taro chairman Dr. Barrie Levitt and India's Sun Pharmaceutical Industries Ltd. (BSE: 524715).
Guggenheim Securities organized a meeting between Taro and institutional investors. On the basis of the institutions' comments, it believes that it can get a deal for the purchase of Sun Pharmaceutical's stake in Taro at $15 per share, 6.4% higher than yesterday's closing price of $13.99, and nearly double the $7.75 per share at which Taro agreed to sell the company to Sun in 2007. The proposed deal gives Taro a company value of $590 million, compared with its market cap of $550 million.
The deal would not be contingent on Taro publishing audited financial reports, which it has not done for several years because of the need for a review of its business results. The deal would also not be contingent on Taro relisting on Nasdaq.
In a letter to Sun Pharmaceuticals, Guggenheim Securities said that the offer would benefit all the parties involved, and that Sun would receive a gain of $140 million.
Sun rejected the offer in its letter of response, saying that its objective is to take control of Taro, as is its right under signed agreements.
Taro's attorney, Adv. Dror Vigdor of Yigal Arnon & Co., said, "What I learned from Guggenheim's offer is that if there is someone willing to pay $15 per share, the offer to purchase at $7.75 looks like a measure that harms the shareholders."
Vigdor added that if the court accepts Taro's position, Sun Pharmaceutical cannot make an offer to purchase at that price, because it is obligated by the special offer to purchase which requires a minimum response. Sun will therefore have to offer a higher price. "If that happens, Sun will act honestly toward the shareholders," he said.
Published by Globes [online], Israel business news - www.globes-online.com - on June 2, 2010
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