Sun, Taro fail to break price deadlock

MUMBAI: Talks between Mumbai-based Sun Pharmaceuticals and Israel���s Taro Pharmaceuticals have fallen through. In a disclosure to the BSE on Tuesday, Sun said both the companies could not reach an agreement on the price for Taro���s promoter shareholding.

Sun and Taro had been engaged in a mediation process, recommended by the Supreme Court of Israel, to resolve the dispute over the special tender offer ��� the price offered by Sun to acquire Taro promoter holding.

Sun Pharma will now await a decision of the Supreme Court of Israel. The company is also issuing a mandatory notification to the Securities and Exchange Commission informing it about the failure to reach an agreement with Taro. Shares of Sun were trading up 2.5% at Rs 1,109 in intra day trade on the BSE.

The Dilip Shanghvi-run Sun has been at loggerheads with Taro since May 2008, over the price it had offered for Taro���s promoter stake. Sun Pharma and Taro had signed a merger agreement for $454 million in May 2007, but Taro broke the agreement in May 2008, on the ground that the merger was ���never approved��� by the shareholders.

Taro had said that the price of $7.75 per share offered by Sun was ���too low���. Taro filed a case in the Tel Aviv district court to prevent Sun from buying the promoter���s shares. In retaliation, Sun filed a case in the Supreme Court of New York against Taro.

The Tel Aviv court ruled in Sun���s favour that a special tender offer was not required, as was being demanded by Taro. Taro then approached the Supreme Court of Israel which gave both companies time to reach a settlement failing which it would deliver a judgement on the issue.