After 17-year courtship, Sun and Taro finally agree on $348M buyout

It took 17 years for Sun Pharmaceutical and Taro Pharmaceutical to finally tie the knot.

On Thursday, the companies revealed their long-awaited merger, with Sun of Mumbai, India, agreeing to purchase outstanding shares in the Israeli drugmaker for $43 each. The deal nets out to $348 million for a 48% premium on Taro's share price of $29.

Taro, which manufactures generics, over-the-counter drugs and APIs, will be delisted on the New York Stock Exchange and become a privately held subsidiary within Sun, which already had a 78.5% stake in the company. The companies expect the deal to close in the first half of this year.

In its most recent financial report, Taro posted revenue of $593 million for the 12 months ending on Sept. 30, 2023, for a 4% increase year over year. Taro’s annual revenue has generally been in decline since maxing out in 2016 at $951 million. Sun posted revenue of 445 rupees ($5.3 billion) in the last fiscal year.

“Over the years, with Sun Pharma’s strategic interventions, Taro has remained a key player in the generic dermatology market in a challenging environment,” Dilip Shanghvi, Sun’s managing director, said in a release.

Way back in 2007, Sun attempted to acquire (PDF) Taro 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 a $685 million takeover offer.

In May of last year, Sun revealed that it had offered to buy outstanding shares of the company for $38 each, with that proposal coming to $307 million.

Last month, Sun said that it had upped its offer to $43 per share, a price that finally satisfied Taro.

“Taro is committed to delivering high-quality products to our patients and customers around the world,” Uday Baldota, Taro’s CEO, said in the release. “This merger will further enable us to compete effectively in our products and markets.”

After riding the success of its dermatology and pediatric products, with most of its sales in the United States and Canada, Taro became one of several sellers of generics who became 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. In March of last year, Sun paid $75 million to settle its portion of the case.