Sun Pharma extends Taro shares purchasing date upto 24th April

Sun Pharma has extended its purchasing deadline for Israeli firm Taro’s outstanding shares to another week.

Alkaloida Chemical Company Exclusive Group Ltd, Sun Pharma’s subsidiary has extended the expiration date of the tender offer started on June 30, 2008 for the purchase of all outstanding ordinary shares of Taro Pharmaceutical Industries Ltd till 5:00 pm, New York City time, on Friday, April 24, 2009, unless further extended or earlier terminated, Sun Pharma announced in a press statement.

Sun Pharma’s offer had previously been scheduled to expire at 5:00 p.m., New York City time, on Friday, April 17, 2009. As of 5:00 p.m., New York City time, on April 16, 2009, 26,865 ordinary shares had been tendered and not withdrawn from the Offer.

Sun Pharma’s tender offer was extended to comply with a continuing order issued by the Supreme Court of Israel. The SC order temporarily prohibited the closing of the Offer until the Supreme Court issues a decision on the appeal of the litigation commenced against Alkaloida and its affiliates.

Taro and certain of its directors have filed a litigation regarding the applicability of the special tender offer rules under the Israeli Companies Law to the Offer.

The Tel-Aviv District Court had previously ruled in favour of Sun that a special tender offer was not required. If the temporary order remains in effect on April 24, 2009, Sun expects to further extend the Offer while the temporary order remains outstanding.

The offer was commenced on June 30, 2008 in order to comply with the terms of the Option Agreement between Alkaloida and the controlling shareholders of Taro.

Alkaloida exercised its options to acquire shares of Taro from the controlling shareholders on June 25, 2008. The Option Agreement required Alkaloida, promptly after exercising the options, to commence a tender offer at USD 7.75 per ordinary share of Taro held by other shareholders.

The complete terms and conditions of the tender offer are sent out in the Offer to Purchase, which is filed with the US Securities and Exchange Commission, the release said.

Greenhill & Co., LLC is acting as the Dealer Manager for the Tender Offer and MacKenzie is acting as the Information Agent for the Tender Offer.

The Sun –Taro Saga

In May last year, Indian generics pharmaceutical company, Sun Pharmaceuticals, offered $454 million, all in cash, to buy out Taro Pharmaceuticals, an Israeli generics firm. Soon, a minority shareholder in Taro filed a case in an Israeli court alleging discrimination, but the Tel Aviv district court refused to issue a temporary injunction that would have halted the deal.

Following this, a crucial meeting of Taro’s shareholders was re-scheduled twice—from July 23 to September 25, and then, to an unspecified time that the company said would come after “the availability of financial results for the year-ended December 2006, and for the first and second quarters of 2007.

In May 2008, Taro Pharma called off the merger, simply saying the agreement allowed either party to terminate the deal after December 31, 2007.

Meanwhile, Sun Pharma quietly went about exercising some options that were agreed to when it made the acquisition offer.

This agreement, signed concurrently with the merger deal, gives Sun Pharma the option to acquire all the shares held by the controlling shareholders (in this case, led by Taro Pharma Chairman Barrie Levitt). The option agreement also specifies that Sun could commence a tender offer for all the remaining Taro shares.

Soon after, Sun Pharma has now offered to acquire shares from Taro Pharma’s promoters and, simultaneously, initiated a tender offer for all outstanding shares. Taro Pharma’s promoters hold two classes of shares—2,600 promoter shares that entitle them to a 33% share of the voting rights in board resolutions and 4.8 million ordinary shares that give them 8% voting rights. However, some directors on Taro Pharma’s board, who weren’t signatories to the options agreement, have already sought legal remedies to block the consummation of the agreement.

In addition, Taro has filed a case in Tel Aviv requesting the district court to order Sun Pharma to comply with the special tender offer rules that are meant to protect minority shareholders under Israeli law. The lawsuit also wants Sun Pharma to be precluded from acquiring shares from the controlling shareholders unless it first complies with the special tender offer rules.

Taro Pharma has also rejected Sun Pharma’s offer price of $454 million as being financially inadequate. In a recent letter to shareholders, Taro Pharma Chairman Barrie Levitt says, given the “dramatic operational and financial turnaround achieved since last year, as well as the future value expected from changes in our business model, including the sale of our Irish operations,” the company needs to get a much better deal. Taro Pharma announced a net profit of $21 million in FY2007 against a loss of $141 million in FY2006.

Sun Pharma, however, has contested these turnaround claims. Taro has only $47 million in cash as of March 31, 2008.

Headquartered in Mumbai, India, Sun Pharmaceutical Industries Ltd.  is a speciality pharmaceutical company. It manufactures and markets a large basket of pharmaceutical formulations as branded generics as well as generics in India, US and several other markets across the world. In India, the company is a leader in niche therapy areas of psychiatry, neurology, cardiology, diabetology, gastroenterology, and orthopedics. Sun Pharma has skills in product development, process chemistry, and manufacturing of complex API, as well as dosage forms.