Taro Pharmaceutical Industries Ltd. (Pink Sheets: TAROF) today gave its official response to last month's offer by Sun Pharmaceuticals Ltd. (BSE: 524715). The board concluded that the offer is "financially inadequate" and a "sham" because "we believe Sun knows that it will not be accepted by the shareholders." It advises the company's shareholders to reject the offer.
Taro chairman Dr. Barrie Levitt and directors Daniel Moros and Tal Levitt did not participate in the deliberations and did not vote.
Sun Pharmaceuticals made the offer after Taro unilaterally cancelled the May 2007 merger agreement between the companies. That agreement led to a number of legal cases which are now in court.
Taro says that the tender offer price is far below both the current market price of Taro’s shares and the price Sun paid to acquire other blocks of Taro shares in recent privately negotiated transactions. Taro adds that Sun is attempting to gain control of Taro without paying a fair price to the shareholders, and that the sole aim of the offer is to exercise certain options to buy the founders stakes of Levitt and Moros families as agreed in the merger agreement.
The original merger agreement included a clause giving Sun the right to buy the founder shares in Taro at the same price per share as in the original agreement.
On June 30, Sun made an unsolicited tender offer for all of the outstanding at $7.75 per share, the price set in the original merger agreement. Sun previously purchased Taro shares $10.25 per share, and had offered to increase the price in its current offer to that amount.
Taro now claims that it can do better than the Sun offer. It says that since terminating the merger agreement, it has had preliminary discussions with, and received expressions of interest from, other parties potentially interested in entering into strategic transactions with it, including purchasing the entire company or making an investment in it.
Finally, Taro's board claims it has been advised by counsel that the offer is in violation of the Companies Law - 1999. It also claims that the offer is coercive, which also renders it illegal.
Taro is currently traded at $9.45.
Published by Globes [online], Israel business news - www.globes-online.com - on July 10, 2008
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