Taro shareholders nix Sun offer to buy 33%

Minority shareholders of the NYSE-listed Israeli firm Taro Pharmaceuticals have turned down majority stakeholder Sun Pharmaceutical’s $367 million offer to acquire the remaining one-third stake they do not own yet.

Rejecting the proposal, they said in a statement on Thursday that the Indian drugmaker’s offer of $24.50 per share was inadequate and not in their best interests.

On October 19 last year, Sun made its offer which was at a near 26% premium to Taro’s share price. Since then, however, Taro’s share price has risen, to close 0.14% up at $35.69 on Wednesday. At the time of writing, Taro was trading at $37.41 on Thursday.

In 2007, Sun had offered to buy Taro Pharma for $450 million, but it could obtain management control only in September 2010 after a bitter legal battle with Taro’s former promoters. Sun now holds 66.32% of Taro, bought in tranches, the first being the 36% it acquired at $7.75 in May 2007.

In an attempt to take the company private, Sun Pharma had made a non-binding offer to acquire the balance stake last year, but it was not successful.

Sun Pharma officials were not available for comment.
Ever since Sun bought the controlling stake in Taro, the latter’s two minority shareholders -- Raging Capital and Grand Slam Asset management -- have been pressuring Sun for a higher price to part with their stakes. They said there was a significant improvement in Taro’s performance over the years and
that Sun was highly undervaluing its shares. Raging valued Taro’s shares at $106.91, while Grand Slam put its figure at $48.
Another minority shareholder – Guardian Point Capital – had asked Sun to revise its buyout bid as well.

Sun has been maintaining that it will stick to its offer price, but, in the wake of Thursday’s developments, it may well have to reconsider. —With Agencies