Putting an end to the long takeover battle between with Israeli firm Taro Pharmaceuticals, Sun Pharmaceuticals has completed the acquisition of controlling stake in Taro following the Option Agreement, entered into in 2007, with Taro’s controlling shareholders led by chairman Dr Barrie Levitt. With this move, Sun’s subsidiaries have increased their economic interest in Taro to 48.7% and their voting rights to 65.8%.
In connection with the closing of the Option Agreement, the parties to the transactions as well as Taro’s directors have settled all outstanding litigation among themselves. Today, Sun Pharma’s shares touched a 52-week high of Rs 1984.70 and are being traded at Rs 1969.95, up by 2.29% or Rs 44.05 at 9.40 am on BSE.
Ilan Leviteh, former Chief Executive Officer of Makhteshim Agan Industries, one of the world’s major producers of agro-chemical products and one of Israel’s largest industrial companies, has been appointed as the new director of Taro.
Early this month, the Israeli Supreme Court ruled in favour of Sun Pharma by unanimously dismissing the appeal by Taro of the previous ruling by the Tel-Aviv District Court holding that the Israeli special tender offer (STO) rules do not apply to the Tender Offer by Sun’s subsidiary, Alkaloida Chemical Company Exclusive Group Ltd. (Alkaloida), to purchase all outstanding Ordinary Shares of Taro for $7.75 net per Ordinary Share in cash.
Sun Pharma had signed a $454-million merger agreement with Taro in 2007 including equity purchase of approximately $230 million at $7.75 per share in cash. However, in 2008, Taro unilaterally terminated the agreement citing lower valuations. In 2008, Sun Pharma launched an open offer to acquire additional stake in Taro, which was challenged by the latter. Both companies then filed suits in Israeli and the US courts.
A seperate statement from Taro said, “Sun and the members of the current Board of Directors of Taro, including members of the Levitt and Moros families, have entered into a settlement agreement pursuant to which the current members of the Board are resigning, and appointees of Sun will become directors of Taro, effective immediately.”
“We are gratified that the company’s operational and financial turnaround leaves it on strong footing and, we think, with a bright future ahead,” said Barrie Levitt, M.D., Chairman of Taro, on behalf of the Company’s outgoing Directors.
Sun Chairman & Managing Director, Dilip Shanghvi, said, “We intend to build on Taro’s market presence in US, Israel and Canada and its expertise in dermatology and pediatrics, along with specialty and generic pharmaceuticals, and over-the-counter products. Taro’s current employees are an important part of our future plans for Taro and we are committed to productive relations with Taro’s employees, and maintaining and enhancing Taro’s facilities in Israel as well as Canada.”
Sun Pharma plans to significantly increase volume of production and approve further investments in Research and Development in Israel and Canada, especially in delivery systems and complex chemistry. “With the scientific talent within Taro, we look forward to increasing the number of product filings of higher complexity,” he added.
Ranjit Kapadia, Vice President-Institutional Research, HDFC Securities, had mentioned concerns over the lack of audited accounts of Taro for the year 2008 and 2009 and quality control of Taro’s Canadian facility, which is still under USFDA scanner.
Taro has strategic sales and marketing operations in Israel and Canada. Taro has factories in Canada and Israel that manufacture topical creams and ointments, liquids, capsules and tablets dosage forms which complements Sun’s current manufacturing and development capabilities for the US.