PEP PILL

Mumbai, Aug. 27: Sun Pharmaceutical Industries has got a boost in its bid to take over Taro Pharmaceutical, with a Tel Aviv court yesterday rejecting Taro’s contention that Sun must make a special tender offer for the Israeli company.

The Indian company will now be able to complete the previously announced tender offer by its subsidiary, Alkaloida Chemical Company Exclusive Group Ltd (Alkaloida).

“Following the closing of the tender offer, all conditions in Sun Pharma’s option agreement to acquire the shares held by the controlling shareholders of Taro will be satisfied and the controlling shareholders will have to deliver their shares,” Sun Pharma said in a statement today.

According to the company, in a well-reasoned and comprehensive decision, the judge of the Tel-Aviv district court, Michal Agmon-Gonen, ruled that it was “disingenuous” for Taro’s directors to claim now, over a year after they approved the transaction, that a special tender offer was required.

The court stated that the directors should have “studied the agreements” prior to their being signed, and should have confirmed then that the agreements were in the company’s best interest.

According to Dilip Shanghvi, chairman and managing director of Sun Pharma, “It is clear based on yesterday’s ruling that the lawsuit by Taro’s independent directors was part of a calculated effort by Barry Levitt (chairman of Taro) to avoid living up to his obligations under the Option Agreement. It is time for Levitt and his family to live up to the contract and do what is required of them under the agreement.”

With respect to those directors who are also shareholders, the court stated that they benefited from Sun’s investment, which basically saved Taro from collapse. The court termed the directors’ conduct in challenging Sun Pharma’s exercise of its contractual option as “grave.”

It also ordered Taro and the other plaintiffs to pay Sun Pharma’s litigation costs.

In May this year, Taro terminated a merger agreement with Sun Pharma.

The Indian company had last year agreed to acquire Taro in an all-cash deal worth $455 million. As per an agreement with Taro earlier, Sun Pharma was to acquire the company for $7.75 per share.