Sun rejects Guggenheim’s $215 mn offer for Taro stake

NEW YORK: Guggenheim Partners offered to buy Sun Pharmaceutical Industries’ stake in Taro Pharmaceuticals Industries on behalf of clients for about $215 million. Guggenheim, which has been advising Taro, offered $15 a share in a May 27 letter and Sun rejected the approach, Taro said in a regulatory filing on Wednesday.

Sun, India’s largest drugmaker by market value and Taro have clashed since 2007 when the Yakum, Israel-based company agreed to be acquired by Sun for $230 million or about $7.8 a share. The takeover faced Taro shareholder opposition and a legal dispute and hasn’t been completed. Taro shares dropped 0.8% to $13.99 in over-the-counter trading on Tuesday.

Guggenheim chairman Alan Schwartz said in the letter that the firm is “highly confident” it can arrange the purchase of the stock by institutional investors. Mr Schwartz is the former chief executive officer of Bear Stearns and became chairman of the investment-banking firm last year.

Mumbai-based Sun said in a January regulatory filing that it held about 144 lakh shares of Taro. That’s about 36% of all outstanding shares. Selling at $15 a share would give Sun a profit of more than $140 million, more than double the size of its initial investment, Schwartz wrote in his letter, which was included in the filing.

“Our goal is to acquire control of Taro as we are entitled to under the agreements signed,” Sailesh Desai, a Sun board member, wrote in a reply to Schwartz that was also included in Taro’s filing. “Therefore, we have to regret your offer.”

A spokesperson for Taro declined to comment. Uday Baldota, a spokesman for Sun, declined to comment beyond Desai’s letter. Sun said that it awaits judgment from the Supreme Court of Israel on litigation relating to the Taro transaction.