Taro Pharmaceutical Industries Ltd. (Pink Sheets: TAROF) says that it would "have no formal comment" and asked shareholders to wait on the tender offer for all outstanding shares of Taro at $7.75 per share in cash begun yesterday by India's Sun Pharmaceuticals Ltd. (BSE: 524715) via subsidiary Alkaloida Chemical Company Exclusive Group Ltd. The offer is at the price in the original acquisition contract signed between Taro and Sun in May 2007, when Taro was on the verge of bankruptcy.
Sun Pharmaceuticals announced last week that it would make the offer to purchase, and that it was obliged to do so in order to exercise its options rights awarded in the merger contract to buy the shares at the same price as for Taro's founders shares in the event that merger failed.
Sun Pharmaceuticals does not expect a strong response to its offer to purchase, given that Taro is currently traded at $9.40. Sun had earlier bought Taro shares at $10.25 per share. Only Taro's controlling shareholders, the Levitt and Moros families are mandated to respond to the offer.
More than a month ago, when Taro chairman Barrie Levitt announced that merger with Sun Pharmaceuticals was cancelled, Taro petitioned the Tel Aviv District Court to rule that if Sun were to exercise its option to buy the founders' shares in Taro it would have to make a special offer to purchase for all shares. The point of the petition is the "special offer", which would require a response by more than half of Taro's shareholders, or else no shares can be bought at all.
If the court rules in Taro's favor, Sun Pharmaceuticals' takeover attempt to buy the Taro founders' share at the original contractual price will fail.
In the press release, Taro state that it "is asking its shareholders to defer making a decision as to whether to accept or reject the Sun offer until they have been advised of the board's position with respect to the offer."
The Tel Aviv District Court is still dealing with lawsuits filed by Taro minority shareholders, funds of Franklin Resources Inc. (NYSE: BEN), against the merger with Sun. The court is scheduled to hear the case tomorrow.
Published by Globes [online], Israel business news - www.globes-online.com - on July 1, 2008
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