Sun Pharmaceuticals has offered to pay a premium over the current market price for shares of Israel's Taro Pharmaceuticals and to resolve the issue with Taro as recommended by the Israeli Supreme Court.

"We are open to discuss...both proposals -- to offer an excellent solution to this dispute and offer a significant premium to the public shareholders over the current market prices," Sun Pharmaceutical Industries chairman Dilip Shanghvi said in a letter to the Taro board of directors.

Sun Pharma said its subsidiary Alkaloida Chemical Company Exclusive Group Ltd (Alkaloida), has also extended the expiration date of the tender offer for the purchase of all outstanding ordinary shares of Taro Pharmaceutical Industries Ltd.

''The offer will now expire at 5:00 pm, New York City time, on 9 January 2009, unless further extended or earlier terminated,'' Sun Pharmaceuticals said in a release.

''The tender offer was extended to comply with a continuing order issued by the Supreme Court of Israel temporarily prohibiting the closing of the offer until the Supreme Court issues a decision on the appeal of the litigation commenced against Alkaloida and its affiliates by Taro and certain of its directors regarding the applicability of the special tender offer rules under the Israeli Companies Law to the offer,'' the release said.

The Tel-Aviv district court had previously ruled in favor of Sun Pharma that a special tender offer was not required.

On 8 December 2008, the Supreme Court heard oral arguments on the appeal. At the conclusion of the hearing, the Supreme Court instructed the parties to negotiate with one another with the view to reaching a settlement to resolve the dispute and to update the Supreme Court within 30 days as to the result of such negotiations. The Supreme Court indicated that it will render a judgment on the appeal if no agreement is reached. Sun has been engaging in discussions pursuant to the Supreme Court's instructions.

If the temporary order remains in effect on 9 January, Sun expects to extend the offer while the temporary order remains outstanding.

The offer commenced on 30 June 2008 in order to comply with the terms of the 'option agreement' between Alkaloida and the controlling shareholders of Taro. Alkaloida exercised its options to acquire shares of Taro from the controlling shareholders on 25 June 2008. The option agreement required Alkaloida, promptly after exercising the options, to commence a tender offer at $7.75 per ordinary share of Taro held by other shareholders.

The offer had previously been scheduled to expire at 5:00 pm, New York City time, on 9 December 2008. As of 5:00 pm, New York City time, on 18 December, 613,936 ordinary shares had been tendered and not withdrawn from the offer.

Sun Pharmaceutical Industries Ltd. is an integrated, speciality pharmaceutical company. It manufactures and markets a large basket of pharmaceutical formulations as branded generics as well as generics in India, the US and several other markets across the world.

In India, the company is a leader in niche therapy areas of psychiatry, neurology, cardiology, diabetology, gastroenterology, and orthopedics. The company has strong skills in product development, process chemistry, and manufacturing of complex API, as well as dosage forms.