Taro Pharma quits merger deal with Sun Pharma
Sun Pharma, India's largest pharmaceutical company by market capitalisation, has failed to clinch the deal for Israeli major Taro Pharma.
In an official release, Taro Pharmaceutical said that it was terminating a May 2007 merger agreement with Aditya Acquisition Company Ltd., a subsidiary of Sun Pharmaceutical Industries Ltd.
Last year, Sun Pharma had signed merger deal to acquire Taro for a total value of $454 million (Rs 1,789 crore), including equity purchase of about $230 million at $7.75 per share in cash, and allowed either party to terminate after December 31, 2007.
Further, the company revised its offer to $10.25 per share, with a condition on elimination of a voting threshold required by Israeli law to implement the merger. Taro is currently trading at $8.30.
However, Taro’s board described Sun’s $10.25 per share offer as financially “inadequate”, citing the advice it received from its financial advisor, Merrill Lynch.
The board believes that the value of the deal, including the increased offer from Sun, does not reflect Taro’s financial turnaround over the past year.
Sun Pharma holds 34% stake in Taro, with 22% voting rights. Taro’s promoters have 45% voting rights in the company, while Franklin Templeton has 10%. The public holds 22.40% stake in the company.
For the fiscal year ended December 31, 2007, Taro posted net sales of $313 million and net income of $21.1 million, compared to an estimated loss of $141 million in 2006.