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Sun Pharma offers to buy remaining Taro shares Posted 10/11/2011

Taro Pharmaceutical Industries confirmed that it had received a letter on 19 October 2011 from Sun Pharma offering to buy all outstanding shares of Taro, not currently held by Sun Pharma, at a price of US$24.50 per share.

The letter from Sun Pharma states, in part, that the proposal represents a valuation of approximately US$1.09 billion for Taro and the proposed purchase price represents a 25.96% premium over Taro’s closing price (US$19.45) on 17 October 2011.

India-based generics manufacturer Sun Pharma only managed to gain a controlling stake in Israel’s Taro in September 2010 after a prolonged legal battle [1], and currently holds 66% of Taro’s shares.

However, not all Taro shareholders are happy with the offer. Grand Slam Asset Management (Grand Slam), which holds some of Taro’s remaining shares, stated in a letter to Taro that they believed that the offer did not ‘fairly value’ the Taro shares. They believe that a fair value would be at least US$48.50 per share, which is almost double what Sun Pharma has offered.

Grand Slam stated in its letter that a fair evaluation would be at least 15 times the company’s earnings before interest taxes depreciation and amortisation (EBITDA). This they have based on data from six similar acquisitions of US generic drug companies.

Grand Slam has urged the Board of Directors of Taro to hire an independent counsel and investment bankers to ensure a fair offer from Sun Pharma or to conduct an unbiased auction of Taro.

An independent committee of Taro’s Board of Directors is expected to review the offer from Sun Pharma’s in due course.

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1. GaBI Online - Generics and Biosimilars Initiative. Sun Pharma finally wins battle for Taro [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2011 November 10]. Available from: www.gabionline.net/Pharma-News/Sun-Pharma-finally-wins-battle-for-Taro

Source: Reuters, Taro

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