Taro Pharmaceutical Industries has shot down yet another buyout proposition from Sun Pharmaceuticals. With Sun's tender offer still on the table, the two were ordered to reach a settlement outside of court. Sun Pharma, which already holds a 36 percent stake in Taro, offered the struggling company two options: either Taro sell the remaining shares at $9.50 a share (up from the initial offer of $7.75) or Sun would be willing to raise the tender offer price to $8.25 a share for controlling shareholders and $9 a share for everyone else.
According to a regulatory filing, Taro's board was none too happy about the proposal: "Our board has asked me to inform you that it did not view the two options set forth in your proposal as constructive, or even in the ball-park," Taro Chairman Barrie Levitt said in a letter to Sun, which was included in a regulatory filing Monday.
Despite Taro's assertions that the offer is inadequate, letters included in SEC filings reveal that Sun isn't impressed with Taro's claims about its performance. Taro's profit increases are largely due to cuts in R&D--a disastrous strategy for a generics company, says Sun. Not only that, but according to Sun Pharma, all of the cash Taro currently has on hand is investments from Sun.
- check out Sun's settlement proposal here
- read Sun's letter regarding Taro's performance
- view the Dow Jones article