Caraco mulls Sun's offer to go private

After two years of manufactuing issues, Caraco Pharmaceuticals may go private. The company has received a buyout offer from Sun Pharmaceuticals, which already owns 75 percent of Caraco, to acquire all outstanding shares of Caraco common stock for $4.75 cash. That's a total bid of $43 million. This represents a five percent premium over the stock's closing price on Dec 2, 2010. In response, Caraco has formed an independent committee to evaluate the proposal, decide if the company should go private and, if necessary, discuss and negotiate Sun's offer.

Caraco's problems began in 2008 when unresolved GMP violations in Caraco's Michigan facilities prompted a visit by U.S. Marshalls, who seized 33 medications and drug ingredients. Manufacturing defects led to contamination issues that tainted the company's products. Caraco was forced to stop manufacturing activities at its sites and hire a consultant to oversee the operations overhaul.