Sun Pharmaceutical Industries said on Monday it will acquire Israel-based Taro Pharmaceutical Industries Ltd, a multinational generic manufacturer, in an all cash deal for $454 million.
Sun Pharmaceutical together with its subsidiaries, has signed definitive agreements to this effect and it would be subject to shareholders approval and other requisite regulatory clearances.
"This is a good opportunity for Sun and Taro to work together to create increasing value and add a complimentary multinational organisation to Sun's business," Sun Pharmaceutical Chairman and Managing Director Dilip Shanghvi said.
Sun Pharmaceutical would fund this $454 million acquisition with internal accruals and proceeds from its earlier $350 million foreign currency convertible bonds issue, Sun Pharmaceutical said in a filing to BSE.
This deal values Taro's equity at $230 million, or $7.75 per share, which is at a 27 per cent premium to its May 18 closing price of $6.10. This deal comes in the midst of a motion filed by two of Taro's beneficial owners of around nine per cent shareholding Franklin Advisers, Inc and Templeton Assets Management Ltd, to prevent Taro from entering into any transaction, which might result in discrimination against minority public shareholders.
On May 10, Franklin Advisers and Templeton Assets Management had filed a motion in Tel-Aviv District Court to prevent what they allege to be discrimination against minority shareholders.
Later on May 19, Franklin Advisers and Templeton filed a request with the court for a temporary injunction to prevent Taro from entering into any transaction, which might result in discrimination against minority public shareholders.
The motion is scheduled to be heard on Monday.
"Sun Pharmaceutical and Taro believe that the proceedings initiated by Franklin Advisers and Templeton are without merit and are detrimental to the best interests of shareholders and Taro. Taro intends to contest the action vigorously," Sun Pharmaceutical said.
"We look forward to working with Taro and its employees going forward. With the addition of 170 talented scientists to our team we look forward to increasing number of product filings of higher complexity," Shanghvi said.
Taro has a strong franchise in dermatology and topical products, in addition to product baskets in cardiovascular, neuropsychiatric and anti-inflammatory therapeutic categories. It has established subsidiaries, manufacturing and products across US, Israel, Canada and North America.
"We intend to build on Taro's expertise in dermatology and pediatrics, along with speciality and generic pharmaceuticals, and over-the-counter products," Shanghvi added. However, as reported on March 20 by Taro, it expects to report a substantial loss for the year ended December 31.
In a separate filing Sun Pharmaceutical said its Committee of Directors has allotted 5,18,417 equity shares of Rs 5 each at a premium of Rs 724.30 per share upon conversion of 8,400 FCCBs of $1,000 each.
