Taro bid: Sun sees long battle ahead
Sun Pharma's proposed takeover of Taro Pharmaceuticals could be a drawn-out affair, a company official said.
By Nina Mehta, ET Bureau |
MUMBAI: Sun Pharma's proposed takeover of Taro Pharmaceuticals could be a drawn-out affair, a company official said.
Speaking to analysts during the company���s earnings call for the first quarter of this year, Dilip Shanghvi, chairman and managing director of Sun Pharma, said: ���It appears that the ultimate resolution will take quite some time. We have several options open to us... Going by the behaviour displayed by Taro Pharmaceuticals, its director and the Levitt family and its passion for filing court cases, their plan seems to be structured so as to draw out the litigation process.���
The promoter���s stake is contingent on the tender offer. ���There is no requirement that the tender offer has to be subscribed to a certain level. The issue is whether the tender offer is valid or a special tender offer needs to be issued,��� he said.
Sun launched the hostile takeover bid after Taro terminated the $454- million merger agreement between them in May 2008, nearly a year after it was signed, on the plea that the pricing of the proposed takeover was ���too low.���
The Taro stock is being traded at $9.45 in the over-the-counter exchange in the US. Taro has moved a Tel Aviv court seeking a higher valuation of the Sun bid while Sun filed a case in the Supreme Court of New York against Taro���s board.
Sun holds 36% equity stake in Taro with 24% voting rights. If the courts rule in Sun���s favour, its stake would go up to 48% with considerably higher voting rights of over 60%.
Taro���s founders currently hold 12% stake in the company while Franklin Templeton, a shareholder that has been against the deal from the beginning, holds around 11%.
Sun���s management thinks that the chance of an out-of-court settlement with Taro is minimal. ���We remain committed to completing this transaction and also continue to look at opportunities elsewhere,��� Mr Shanghvi added.
Speaking to analysts during the company���s earnings call for the first quarter of this year, Dilip Shanghvi, chairman and managing director of Sun Pharma, said: ���It appears that the ultimate resolution will take quite some time. We have several options open to us... Going by the behaviour displayed by Taro Pharmaceuticals, its director and the Levitt family and its passion for filing court cases, their plan seems to be structured so as to draw out the litigation process.���
The promoter���s stake is contingent on the tender offer. ���There is no requirement that the tender offer has to be subscribed to a certain level. The issue is whether the tender offer is valid or a special tender offer needs to be issued,��� he said.
Sun launched the hostile takeover bid after Taro terminated the $454- million merger agreement between them in May 2008, nearly a year after it was signed, on the plea that the pricing of the proposed takeover was ���too low.���
The Taro stock is being traded at $9.45 in the over-the-counter exchange in the US. Taro has moved a Tel Aviv court seeking a higher valuation of the Sun bid while Sun filed a case in the Supreme Court of New York against Taro���s board.
Sun holds 36% equity stake in Taro with 24% voting rights. If the courts rule in Sun���s favour, its stake would go up to 48% with considerably higher voting rights of over 60%.
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Taro���s founders currently hold 12% stake in the company while Franklin Templeton, a shareholder that has been against the deal from the beginning, holds around 11%.
Sun���s management thinks that the chance of an out-of-court settlement with Taro is minimal. ���We remain committed to completing this transaction and also continue to look at opportunities elsewhere,��� Mr Shanghvi added.
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