Israeli drug firm Taro, which is fighting a takeover battle with Mumbai-based Sun Pharmaceutical, today said that the Supreme Court of Israel has debarred the Indian firm from acquiring further stake in the company.
"(The) Supreme Court of the State of Israel has ruled that Sun Pharmaceutical Industries ("Sun") may not exercise a warrant to purchase additional Taro shares while a previously ordered temporary injunction remains in effect," Taro Pharmaceutical said in a statement.
Sun Pharma is the single largest shareholder in Taro with 36 per cent stake and it has been trying to take control of the company ever since their $454-million merger deal of 2007 was unilaterally terminated by the Israeli firm a year later. After this both companies had filed cases against each other and the matter is pending in the Supreme Court.
Sun Pharma had launched an open offer for acquring additional shares of Taro in 2008. The open offer was challenged in the Supreme Court, which prohibited the Mumbai-based company from closing the offer untill the court gives a ruling in other cases related to takeover.
Taro said, In December 2009, Sun attempted to exercise a warrant to purchase approximately 3.7 million additional Taro shares at a price of $6 per share.
Taro alleged that the purchase of share through warrants was violation of the court order, which is to maintain status-quo.
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Sun asked the apex court to rule that the temporary injunction does not prohibit the exercise of the warrant, which was not accepted by the court.
"In its decision, the Supreme Court ruled that the purpose of the temporary injunction is to maintain the status quo until a judgment on the appeal is rendered and prohibited Sun from exercising the warrant," Taro said.
Taro voluntarily agreed to grant an appropriate extension to the term of the warrant in the event that the court decides the appeal after expiration of the warrant, it added.