Persistent Sun Pharma ready to complete Taro buyout—16 years after initial offer

It’s been a long courtship, full of ups and downs. But it appears that Sun Pharma of India will finally complete an acquisition that began with a buyout offer in 2007, gaining full control of Taro Pharmaceutical Industries.

Sun, which already owns 78.5% of Taro—which already makes it a subsidiary—has offered to buy up the company’s remaining shares for $38 each, according (PDF) to a filing with the Bombay Stock Exchange. The deal would come to $307 million and would provide a 41.5% premium on Taro’s stock price over the last 60 days, the filing said.

“We believe that the proposed transaction provides a compelling liquidity opportunity for the company’s shareholders,” Sun wrote in the filing.

Generic drugmaker Taro has assets of $1.3 billion, with cash and short-term bank deposits totaling $274 million. Taro, which does most of its business in the United States and Canada, pulled in $573 million during its fiscal year 2023.

In 2005, Taro had revenue of $298 million and grew quickly, peaking at $951 million in 2016, before the company became one of several generics sellers entangled in a U.S. Department of Justice price-fixing probe.

In 2020, Taro agreed to pay $419 million to turn witness and avoid prosecution on two criminal conspiracy charges. Two months ago, Sun paid $75 million to settle its portion of the case.

In 2007, Sun attempted to acquire (PDF) the Israeli company for $454 million, or $7.47 per share. In 2012, Sun paid $39.50 per share to acquire 77% of the company with the intent of making Taro a privately-held subsidiary. But six months later, Taro shareholders rejected the $685 million deal.

Now the buyout appears on the verge of getting done for approximately the same price per share as what Sun paid more than a decade ago.

When Sun first proposed a buyout in 2007, Taro was losing money. But shortly afterward, the company’s fortunes began to turn, convincing stockholders that Taro was undervalued.

“Sun Pharma’s track record with acquisitions and deals has been good. So overall, this seems to be a good proposition for the company,” Vishal Manchanda, an analyst with Systematix Corporate Services, said in a note to investors, according to BQ Prime.