Sun Pharma deal with Isreali firm Taro off | business | Hindustan Times
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Sun Pharma deal with Isreali firm Taro off

The uncertainty over Sun Pharmaceutical’s acquisition of Israel’s Taro Pharmaceutical ends with the latter terminating the merger agreement. HT Correspondent reports.

business Updated: May 28, 2008 22:04 IST
HT Correspondent

The uncertainty over Sun Pharmaceutical’s acquisition of Israel’s Taro Pharmaceutical has ended with the latter terminating the merger agreement.

Sun Pharma had initiated the acquisition of Taro Pharma, billed as the second largest deal in the Indian pharma sector last year, at a proposed price of $454 million. The deal was contested by Taro’s minority shareholders who objected to the price of $7.75 per share agreed for the acquisition under the merger agreement.

Franklin Advisers and Templeton Asset Management, minority shareholders in Taro, initiated judicial proceedings against the Israeli company to restrain the merger deal in May 2007.

Taro with a strong research team and 100 abbreviated new drug applications in the US alone was to guide Sun Pharma’s expansion in the US market. “In that sense it is negative,” said Sarabjit Kour Nangra, pharma analyst at Angel Broking. She, however, said the outlook for the stock would be only sentimentally affected over termination of the acquisition.

Sun Pharma’s shares rose 6.61 per cent on Wednesday to Rs 1,466, which analysts believe is a reaction to the end of uncertainty over the Taro deal. “The stock was hammered to Rs 900 because of the issue,” said Ranjit Kapadia, pharma analyst at Prabhudas Lilladher.

Sun Pharma had later consented to increase the bid price to $10.25 on certain conditions, which according to agency reports, was objected to by Taro’s financial advisers, Merrill Lynch. As part of the merger process Sun had picked up close to 97 lakh shares of Taro at a cost of $59 million to help the company tide over loan default.

That acquisition was done at a price of $ 6 per share. “We do not have clarity on the termination details. Sun may have to liquidate its holdings in Taro now,” said Ranjit Kapadia, pharma analyst at Prabhudas Lilladher. Sun Pharma had further picked up Taro shares from the open market and other entities at $10.25 a share.

“We do not have clarity on the termination details. Sun may have to liquidate its holdings in Taro now,” said Ranjit Kapadia, pharma analyst at Prabhudas Lilladher. Sun Pharma had further picked up Taro shares from the open market and other entities at $10.25 a share.