In May 2007, when Taro was in a dire financial crisis, Sun Pharma had agreed to invest nearly $60 million in cash to save the company from bankruptcy. The merger agreement granted Sun Pharma the option to acquire all the shares of Taro's controlling shareholders.
In May 2008, Taro purported to terminate the merger agreement. As per the Option Agreement, Sun Pharma has the right to exercise its options within 30 days after termination of the Merger Agreement. Although, Sun Pharma believes that Taro's purported termination of the Merger Agreement was improper, it has exercised the options to preserve its rights under the Option Agreement and states that the exercise of the options shall not in any way be construed to be an acceptance or recognition of the purported termination of the Merger Agreement. In connection with the exercise of the options, the agreement also requires that Sun Pharma specifically commence its tender offer at $7.75 per share.
Sun has also filed an action in the US against Taro and its board of directors asserting fraud claims.
