Sun Pharmaceutical Industries vs. Taro Pharmaceutical Industries - Biggest Battles in Biopharma

Sun Pharmaceutical Industries vs. Taro Pharmaceutical Industries

Sun and Taro's fight might not involve the most money of the battles listed, but it certainly is one of the longest running. In May 2007, Indian drugmaker Sun agreed to buy fellow generics maker Taro, which is based in Israel, for $454 million. Sun also agreed to provide immediately $45 million of interim equity financing to Taro by acquiring 7.5 million of the company's ordinary shares.

It was all smiles and handshakes then. But not everyone was happy with the plan. Franklin Advisers and Templeton Asset Management, the beneficial owners of approximately nine percent of the Taro's ordinary shares, filed a motion in Tel-Aviv District Court to prevent alleged oppression of minority shareholders. They also filed a motion for the appointment of a special interim manager to review the company's efforts to identify an appropriate transaction.

Taro initially labeled Franklin and Templeton's actions "without merit" and vowed to fight. But Taro soon took a second look at the transaction. And in May 2008, the company announced it was terminating the agreement, as the board determined it "had become stale and does not reflect the dramatic operational and financial turnaround that the Company has achieved since last year."

Sun was not amused, especially after Taro directors filed litigation on the applicability of the special tender offer rules under the Israeli law. After a court handed down a decision against Taro, Sun Chair and Managing Director Dilip Shanghvi said the lawsuit "was part of a calculated effort by [Taro Chair] Barry Levitt to avoid living up to his obligations under the Option Agreement. It is time for Dr. Levitt and his family to live up to the contract and do what is required of them under the Option Agreement."

The spat continues to this day with back and forth press releases. However, just yesterday the Supreme Court of Israel rebuffed Taro's attempt in court to block Sun's offer. The court determined that the Israeli Special Tender Offer rules do not apply to this case.

"The Court declared that its ruling in favor of Sun was dictated by concerns of fairness, good faith and commercial stability and affirmed the District Court's finding that Taro and its directors had acted in bad faith. The Court also awarded Sun expenses," Sun says in a statement. Still, Templeton Asset Management won't tender the shares it owns in Taro to Sun's offer at $7.75 a share, Mark Mobius, the fund's executive chairman, said during a TV interview.

Sun Pharmaceutical Industries vs. Taro Pharmaceutical Industries - Biggest Battles in Biopharma
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