The on-going tussle between Sun Pharmaceutical and Taro intensified on Thursday with the Mumbai-based company saying it has exercised the option of acquiring all shares of Taro held by controlling shareholders, while filing a law suit in New York against the Israeli firm and its board.
"A subsidiary of Sun Pharma has exercised the option under its option agreement to acquire all the shares held by the controlling shareholders of Taro Pharmaceuticals," Sun Pharma said.
The company said it would commence a tender offer for all ordinary shares as required by the option agreement in the next few days.
The Mumbai-based company reiterated the option agreement also required that it specifically commenced its tender offer at $7.75 per share within 30 days after termination of the merger agreement.
Taro and Sun had signed the $454-million merger agreement in May last year. Sun claimed in the event the merger was not consummated, Taro's controlling shareholders led by Taro's Chairman Barrie Levitt, granted Sun Pharma an option to acquire all their shares, including all of the founder's shares.
After one year of signing the agreement, Taro last month unilaterally terminated the merger agreement.
In the meantime, Sun Pharma said it has filed an action in the Supreme Court of the State of New York against Taro and its full Board of Directors.
"The action asserting fraud claims against Taro and its directors asks the court to order the controlling shareholders to honour their promises under the Option Agreement,"
In addition, Sun also asked the court for an order declaring that the merger agreement was not properly terminated.
Sun Pharma Chairman and Managing Director Dilip Shanghvi said: "We have had enough of the delays, excuses and misrepresentation by the Board of Taro and Levitt (Taro's chairman).
"In good faith, Sun Pharma complied with its obligations under the merger agreement approved by Taro's Board and is now complying with the terms of the Option Agreement signed by Levitt and his family."
Addressing the Taro shareholders, Sun said its communication does not constitute an offer to purchase nor a solicitation of an offer to sell ordinary shares of Taro Pharmaceutical Industries Ltd.
It said the offers to buy ordinary shares would only be made after filing necessary documents with the US Securities and Exchange Commission and delivering to holders of Taro's ordinary shares.
Earlier, Taro had filed lawsuit against Sun on May 28 in an Israeli court seeking to 'protect minority shareholders' in the event of Mumbai-based firm trying to gain voting rights of up to 45 per cent through open market share purchase.
Taro had also filed an lawsuit on June 15, to stop Sun from any attempt to disrupt the sale of its Irish facility.
However, Sun Pharma responded by threatening to hit back and warned the Israeli company against the sale of the facility, while cautioning potential buyers also.