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Sun Pharma offers more to buy out Israeli company Taro Pharma

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Drugmaker Sun Pharmaceutical Industries has upped its offer to mop up additional shares in Israeli arm Taro Pharmaceutical Industries, six months after its earlier proposal.

Taro’s special committee evaluating the proposal has agreed in principle to the revised proposal and to negotiate definitive agreements, Sun Pharma said, adding however that there was no assurance on achieving this.

Also read: Sun Pharma to co-market Zydus Lifesciences’ drug for Chronic Kidney Disease 

Sun said its revised offer proposes $43 per share, as compared to $38 offered in May this year.

The May offer had been opposed by Krensavage Asset Management LLC, the largest minority shareholder in Taro Pharma. “Sun’s inadequate offer amounts to a 17 per cent discount to the value of Taro’s tangible assets, namely $36 a share of net cash. If Taro liquidated, shareholders could receive more than $45 a share,” Krensavage said.

Also read: Taro stake buyout to help operate its dermatology biz profitably amid enhanced competition: Sun Pharma

Sun Pharma holds 78.48 per cent in Taro, and industry sources had told businessline it would fork out about $300 million for the first offer.

Offer on the table

On May 26, 2023, Sun Pharma had delivered to the board of directors of Taro Pharma a letter containing a non-binding indication of interest to acquire all outstanding ordinary shares in Taro, other than those held by Sun or its affiliates, at $38 per share in cash, Sun Pharma said on Tuesday.

“Subsequently, the company engaged in multiple rounds of price negotiations with a special committee of the board of directors of taro regarding the proposal. Such negotiations resulted in the company communicating to the special committee updated terms pursuant to which the company has proposed to acquire all of the outstanding shares of Taro’s ordinary shares… for a purchase price of $43 per share in cash,” Sun Pharma told the stock exchanges.

Also read: Sun Pharma concludes ESOP plan of former Ranbaxy employees and closes Trust 

“On December 10, 2023, the special committee confirmed that it agreed in principle with the revised proposal and that it has agreed to negotiate definitive agreements,” it said, adding that negotiations on the definitive terms and agreements for the revised proposal were ongoing, and there were no assurances that a definitive agreement would be reached.

The special committee consists of only independent directors; the required corporate approvals for the proposed transaction shall include the affirmative approval of Taro shareholders holding a majority of the votes, it added.

Second attempt

Sun’s latest offer to buy out and delist Taro from NYSE comes 10 years after its previous effort was terminated. In 2007, Sun had made a $454-million offer for Taro — a deal it sealed after the two companies fought a long cross-country battle. Then, too, Sun’s efforts to mop up the outstanding shares ran into resistance from a section of minority shareholders. With about 66 per cent in Taro, Sun eventually abandoned a sweetened proposal to mop up the remaining shares in 2013.



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