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 [2].

Sun Pharma offered in October 2011 to buy all outstanding shares of Taro, not currently held by Sun Pharma, at a price of US$24.50 per share [2]. However, despite this offer being increased by almost 60% to US$39.50 per share in August 2012 [3], Taro shareholders still rejected the deal. The shareholders already believed in October 2011 that a fair value for Taro would have been at least US$48.50 per share [2], which Sun Pharma was not willing to offer.

Sun Pharma has been battling to take over Taro since May 2007, when Taro was a struggling company and Sun Pharma first bought shares in Taro [1]. Since that time, however, Taro has become profitable, with its share price quickly surpassed the offer from Sun Pharma. Taro’s closing share price on the New York Stock Exchange on 7 February 2013 was US$50.55.

‘As earnings keep coming in stronger and stronger for Taro, there was obviously a lot of disconnect with the price Sun [Pharma] was willing to offer,’ IDFC Securities analyst Nitin Agarwal told Bloomberg. He added that it was ‘fairly unlikely that the deal would have gone through’.

The two companies stated that the termination of the merger agreement ‘was in the best interest of the respective companies and shareholders’.

Reference

1.  GaBI Online - Generics and Biosimilars Initiative. Sun Pharma finally wins battle for Taro [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2013 Feb 22]. Available from: www.gabionline.net/Pharma-News/Sun-Pharma-finally-wins-battle-for-Taro

2.  GaBI Online - Generics and Biosimilars Initiative. Sun Pharma offers to buy remaining Taro shares [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2013 Feb 22]. Available from: www.gabionline.net/Pharma-News/Sun-Pharma-offers-to-buy-remaining-Taro-shares

3.  GaBI Online - Generics and Biosimilars Initiative. Sun Pharma finally gains full control of Taro [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2013 Feb 22]. Available from: www.gabionline.net/Pharma-News/Sun-Pharma-finally-gains-full-control-of-Taro

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