Taro warns shareholders about possible Sun Pharmaceutical proxy war

By Lisa Kerner

Charlotte, N.C., Dec. 8 - Taro Pharmaceutical Industries Ltd. urged its shareholders to vote for the company's board of director nominees at the annual meeting on Dec. 31.

In a letter to shareholders on Tuesday, Taro said it believes Sun Pharmaceutical Industries Ltd. may wage a proxy battle to gain control of Taro's board.

Taro told shareholders that Sun has, for the past 18 months, tried to take over Taro "by every conceivable means except one: by agreeing to your board's demand that Sun offer a fair price to shareholders."

Taro said Sun's continuing $7.75-per-share tender offer is "significantly below current market prices."

Taro shares closed at $9.22 (Pink Sheets: TAROF) on Monday.

Sun has also refused to comply with Israeli special tender offer rules designed to protect minority shareholders in the event of a takeover attempt, the letter said.

The matter is pending before the Israeli Supreme Court.

In May 2007, Taro agreed to be acquired by Sun for $7.75 per share and then terminated the merger agreement in May 2008. Sun offered to increase the price to $10.25 per share, which Taro rejected.

As previously reported, Sun exercised some options to acquire shares of Taro from the company's controlling shareholders on June 25, 2008 and began the tender offer on June 30, 2008.

Taro is a pharmaceutical company with offices in Israel and Hawthorne, N.Y.

Mumbai, India-based Sun makes specialty pharmaceuticals and active pharmaceutical ingredients.

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