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Sun Pharmaceuticals, which was engaged in a battle to get a full control over its Israeli arm - Taro, has finally given up its efforts. On Friday, the Mumbai-based company and Taro have mutually agreed to terminate their merger agreement which was announced in August 2012. Presently, Sun Pharma holds 66.5% stake in Taro.
Sun had signed the deal to buy Taro for $454 million in May 2007.
As per the latest offer given by Sun for each taro shares, shareholders of Taro (other than Sun Pharma and its affiliates) would have received a cash payment of $39.50 per share upon the closing of the merger.
Currently, the Taro shares are traded at $50.5, about 28% higher than Sun's current offer of $39.5 at NYSE. Sun Pharma ended the day at Rs 744.05, losing 0.63% from yesterday’s close, on the BSE.
Febraury 2012, Raging Capital, which holds about 5% in Taro had written to Taro board asking them to immediately reject Sun Pharma's offer of $24.5 per share and demanded a price of $71.9 per share. In August last year, Sun had revised its previuos offer of $24.50 per share and announced a new offer of $39.50 per share.
After revising the price, another minority shareholder - Grand Slam Asset management came against Sun's offer with a demand of $48.5 per share. Grand Slam also holds about 5% in Taro.
In an interview with Business Standard, Mitch Sacks, chief investment officer at Grand Slam had said that $110 per share was an ideal price Sun can offer for each Taro shares.
Says Ranjit Kapadia of Centrum Broking, "Sun, which was planning to make Taro a wholly-owned subsidiary, will have to share 33% profit with other minority sharholders, which seems to be tough for the company as Taro performs pretty well today."
Taro recently posted Q3 FY13 sales of $186 million, up by 25% and posted a net profit of $89 million. For the first nine months, sales were $506 million.
After the deal was struck to buy Taro in 2007, Sun had increased its stake in Taro to 48% in September 2010. Later, Sun acquired 12% stake of Templeton in Taro, for $82 million ($16 per share) in November 2011.
Timeline
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Sun had signed the deal to buy Taro for $454 million in May 2007.
As per the latest offer given by Sun for each taro shares, shareholders of Taro (other than Sun Pharma and its affiliates) would have received a cash payment of $39.50 per share upon the closing of the merger.
Currently, the Taro shares are traded at $50.5, about 28% higher than Sun's current offer of $39.5 at NYSE. Sun Pharma ended the day at Rs 744.05, losing 0.63% from yesterday’s close, on the BSE.
Febraury 2012, Raging Capital, which holds about 5% in Taro had written to Taro board asking them to immediately reject Sun Pharma's offer of $24.5 per share and demanded a price of $71.9 per share. In August last year, Sun had revised its previuos offer of $24.50 per share and announced a new offer of $39.50 per share.
After revising the price, another minority shareholder - Grand Slam Asset management came against Sun's offer with a demand of $48.5 per share. Grand Slam also holds about 5% in Taro.
In an interview with Business Standard, Mitch Sacks, chief investment officer at Grand Slam had said that $110 per share was an ideal price Sun can offer for each Taro shares.
Says Ranjit Kapadia of Centrum Broking, "Sun, which was planning to make Taro a wholly-owned subsidiary, will have to share 33% profit with other minority sharholders, which seems to be tough for the company as Taro performs pretty well today."
Taro recently posted Q3 FY13 sales of $186 million, up by 25% and posted a net profit of $89 million. For the first nine months, sales were $506 million.
After the deal was struck to buy Taro in 2007, Sun had increased its stake in Taro to 48% in September 2010. Later, Sun acquired 12% stake of Templeton in Taro, for $82 million ($16 per share) in November 2011.
Timeline
| February 13: Companies terminated merger plans |
| October 12: Grand Slam demands $48.5 for Taro shares |
| August 12: Sun increases offer by $39.5 per share |
| July 19: Special Committee of Taro Board rejects Sun's offer |
| Feb 28 : Raging Capital asks Taro Board to reject Sun's offer |
| Oct 18, 2011: Sun announced an offer of $24.5 per share |
| Nov 2011: Sun acquired 12 per cent stake of Templeton in Taro, for $82 million ($16 per share) |
| Sep 2011: Sun offers $7.75 per share, for remaining stake in Taro |
| Sep 2010: Sun picks 12.7% held by promoter family, increases to 48% from the earlier 36% |
| May 2007: Sun signs $454-mn deal to buy Taro |
