Sun Pharma Offers To Buy Remaining Stake In Taro At 26% Premium

By Anil Das

  • 19 Oct 2011

Mumbai-based Sun Pharmaceuticals has proposed to acquire Taro Pharmaceuticals with an offer to purchase all outstanding shares of the Israeli firm, the company has disclosed in a statement to the Bombay Stock Exchange.

In a letter to Taro, Sun Pharma has proposed that it will acquire all outstanding shares of Taro currently not held by Sun Pharma, for $24.50 a share in cash – representing 25.96 per cent premium over the most recent closing price of Taro common stock, the statement added.

Sun Pharmaceuticals currently owns 66.3 per cent in Taro.


“This offer is subject to the approval of Taro board and such other authorities as may be required and subject to completion of necessary compliances/formalities as may be required,” the statement added.

Back of the envelope calculations show Sun Pharma would need to shell out around $367 million (Rs 1,810 crore) for the estimated 15 million odd outstanding shares it doesn't own. The deal will value Taro at $1.09 billion.

Shares of Sun Pharmaceutical closed at Rs 482 per unit on the BSE, up 3.09 per cent from the previous close.


Although Sun Pharma had signed a $454 million merger agreement with Taro in 2007, the latter unilaterally terminated the agreement in 2008, citing lower valuations. In the same year, Sun Pharma came up with an open offer to acquire some additional stake in Taro, which was challenged by the company. Consequently, both companies filed suits in Israeli and US courts.

With this acquisition, Sun Pharma plans to raise its volume of production significantly and make further investments in R&D across Israel and Canada, especially in delivery systems and complex chemistry.

Taro has strategic sales and marketing operations in Israel and Canada. It also has factories in those countries for manufacturing topical creams and ointments, liquids, capsules and tablets dosage forms, which complement Sun’s current manufacturing and development capabilities for the USA.


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