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Sun calls it quits in 6-year effort to swallow Taro

Shareholders want more than $39.50 a share
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It is over. Fini. Kaput. Sun Pharmaceutical Industries has taken its $685 million offer and gone home. At least for now.

After 6 years of trying to buy the 40% of Taro Pharmaceutical Industries ($TARO) it didn't own, Sun says it has given up on it. "We concluded that Taro shareholders wouldn't agree to the deal unless the offer price was increased substantially," Bloomberg reports Sun Managing Director Dilip Shanghvi saying during an earnings call today.

Taro's board in August was fine with the $39.50 a share offer that the Indian company had made. That was up substantially from the $24.50 a share offer it had sneered at the month before. But Taro shareholders just couldn't get their enthusiasm up for a price they believe still sells the company short. The market agrees. Taro's stock price closed at $50.55 Thursday in trading in New York.

When Sun first offered to buy the company in May 2007 for $454 million, Taro was losing money. Taro has expertise in dermatology and pediatrics drugs and sells mostly to the U.S., a market into which Sun wanted to expand. But during the drawn-out negotiation process, Taro got its act together and in November reported that its second-quarter sales were up 16% to $161 million. In 2011, it sold about $436 million in generic treatments for things such as head lice.

"As earnings keep coming in stronger and stronger for Taro, there was obviously a lot of disconnect with the price Sun was willing to offer," IDFC Securities analyst Nitin Agarwal told Bloomberg from Mumbai, India. "It was fairly unlikely that the deal would have gone through."

- read the Bloomberg story

Special Reports: Sun Pharmaceutical Industries -- Top 11 Fastest-Growing Generics Companies | Taro Pharmaceutical Industries -- Top 11 Fastest-Growing Generics Companies

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