Sun Pharmaceutical exercises option, begins tender offer for Taro Pharmaceutical

By Lisa Kerner

Charlotte, N.C., June 30 - Sun Pharmaceutical Industries Ltd. subsidiary Alkaloida Chemical Co. Exclusive Group Ltd. began a $7.75-per-share tender offer for all outstanding ordinary shares of Taro Pharmaceutical Industries Ltd.

Sun said the tender offer is set to end at midnight ET on July 28 unless extended.

It was previously reported that Taro agreed in May 2007 to be acquired by Sun for $7.75 per share in cash in a deal valued at $454 million including the refinancing of about $224 million in net debt. Taro then terminated the deal on May 28.

Taro's controlling shareholders led by company chairman Barrie Levitt granted Sun an option to acquire all their shares, including the founders' shares, if the merger was not consummated.

Alkaloida exercised the option on June 25 to begin the tender offer, the release stated.

The offer is not conditioned on financing or approval by Taro's board.

Greenhill & Co., LLC is the dealer manager for the tender, and MacKenzie Partners, Inc. is the information agent.

Taro's board of directors will publicly announce its position on the unsolicited tender offer on or before July 14, the company said in a statement released on Monday.

The company's shareholders were urged to defer making a decision as to whether to accept or reject the Sun offer until they have been advised of the board's position, the Taro statement said.

Taro's board will evaluate the offer with the assistance of Merrill Lynch, Yigal Arnon & Co. and Skadden Arps Slate Meagher & Flom LLP.

Sun filed an action in the Supreme Court of the State of New York against Taro and its full board of directors alleging fraud, a prior Sun statement noted. The company said it wants the court to order the controlling shareholders to honor their promises under the option agreement and to declare that the merger agreement between the companies was not properly terminated.

Taro filed suit in Israel to keep Sun from preventing a sale of Taro's Irish operations, a prior news release stated.

In addition, Taro filed an action in Israel in May seeking a declaratory ruling that should Sun attempt to purchase Taro shares in an amount that would increase its voting power to more than 45%, it must comply with the special tender offer rules under Israeli law that protect minority shareholders.

Sun said previously that Taro is not entitled to terminate its merger with Sun. However, Taro maintained that either party could terminate the agreement after Dec. 31.

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

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

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