Taro Pharmaceutical Industries (Nasdaq: TARO) chairman and CEO Dr. Barrie Levitt may be on the verge of losing the company he built over many years. On Friday, global mutual fund manager Franklin Resources Inc. (NYSE:BEN; LSE: FRK) (Franklin Templeton), which operates out of the US and Singapore, filed a 13D notice with the US Securities and Exchange Commission (SEC) in which it said it was increasing its holdings in Taro to 16.8% for an investment of $63.8 million.
Franklin Templeton’s filing implies that it aims to bring about a change in ownership at Taro, following the extended delay in the publication of its financial report for 2005. As result, the company received a delisting notice from Nasdaq on July 21, and said it would request a hearing, adding that its amended report would be filed in August.
In June, Taro said it would restate its results for 2003 and 2004, and expected to post net profit of $14-16 million on sales of $295-305 million 2005. Taro has a history of missed forecasts and profit warnings and this substantially influenced the attitude of its investors. The company has published a number of profit warnings since 2004, and these had a marked effect on its share price, sending it tumbling from $70 at the end of 2003 to the current low of $11.90. As a result, Taro’s market cap has fallen from its high of $2 billion to $350 million. This is probably why it has become a takeover target.
Taro recently made the news again after Haifa Bay area, the location of its factory, became a target for Hizbullah Katushya rocket attacks. The plant in Haifa, which employs 620 people, produces drugs, ointments and creams primarily for treatment of skin conditions. In an interview with “Globes” two weeks ago, Taro general manager Samuel Rubinstein tried to sound calm. “The present situation has obviously caused us damage, but most of this is internal rather than external,” he said. “We will meet all orders and our commitments to customers in full. We don’t them to lose in faith in us as their supplier, or in Israel in general.”
Published by Globes [online], Israel business news - www.globes.co.il - on August 6, 2006
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