| Sun's Taro takeover faces fresh hurdle |
| BS Reporter / Mumbai December 7, 2007 |
| Sun Pharmaceutical Industries (SPIL) efforts to acquire Israeli drug major Taro will be further delayed, with Taro deciding to again postpone the crucial shareholder meeting to vote on the proposed merger to the first quarter of 2008, instead of the previously stated timeline of before the end of November 2007. Taro, which yesterday released its unaudited financial results for 2006 and for the nine months ended September 2007, had earlier postponed the meeting twice, citing reasons such as to allow the shareholders additional time to fully consider the proposed transaction and to make available the financial results for the shareholders. So far Sun has made equity investments in Taro totaling $59 million, including $41 million to help the cash starved Taro avoid an impending payment default and another $18 million through the exercise of warrants. Sun has not yet taken any decision on further infusion of capital into Taro, before the merger is completed, said Uday Baldota, VP, Sun Pharma. "Our investment argument for Taro merger, articulated in May 2007, still holds," he said, while commenting on whether Sun would rethink the investment commitment in Taro, based on the latest financial results. Sun Pharma announced its plans to acquire Taro in mid-May 2007 for a total value of $ 454 million (Rs 1789 crore), including equity purchase of approximately $230 million at $7.75 per share in cash. Franklin Advisers and Templeton Asset Management (Templeton), which holds approximately 9% of Taro's ordinary shares, approached the Tel Aviv District Court citing the deal was undervalued and the transaction allegedly oppressed the interests of minority shareholders. The district court did not issue an injunction to stop the merger proceedings. The case is still pending in the Court. Taro said the company estimates its revenue for the year of 2006 to be about $184 million, with a net loss of about $140.7 million. In June, it had projected revenues of $180-$200 million and a net loss of $95-$120 million for 2006. Taro said the losses mounted in 2006 mainly owing to efforts to reduce inventories with wholesalers, price erosion of its certain key products, delay in new product introductions, previous legal and accounting expenses and certain non-cash impairment of assets, including the Company |
