Taro asks Sun to raise bid; proposes shareholder referendum

06 January 2009

Taro Pharmaceuticals has rejected Sun Pharma's latest offer to acquire a 64-per cent stake in the company and, instead, proposed a shareholder referendum in case Sun offered an acceptable price.

Taro said Sun Pharma should join them in a shareholder referendum for the deal and that Sun Pharma should agree to stand still for three years if shareholders reject the offer.

''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 his letter to Sun Pharma chairman and managing director Dilip Sanghvi.

Sun Pharma had sent two proposals  to Taro on 22 December. While one sought an amendment to the agreement on merger, the second one offered to raise the  tender offer to $9 a share for non-Levitt family (the Levitts are the original controlling promoters of Taro).

The latest offer is less than the price offered by Sun Pharma earlier and rejected by Taro. The Levitt family, promoters of Taro, are now unwilling to sell their stake.

Sun has already  acquired 36.4-per cent stake at an average price of about $8 per share. The Israeli court also allowed Sun Pharma to acquire another 12.2 per cent from Taro's promoters at $7.75 per share.