Sun Pharmaceutical Moves To Buy Taro In $450 Million Deal

Sun Pharmaceutical has signed a definitive agreement to acquire Haifa, Israel-based Taro Pharmaceutical Industries in a deal valued at more than $450 million, the companies announced May 21.

Sun has agreed to pay $7.75 per share in cash for Taro, a premium of 27 percent over the closing price of $6.10 per share on May 18, according to the companies. The transaction would have a total equity value of approximately $230 million. However, Sun also has agreed to refinance Taro's net debt of approximately $224 million, for an overall value of approximately $454 million.

Under a separate agreement, Mumbai, India-based Sun will provide Taro an immediate cash infusion of $45 million by acquiring 7.5 million of the company's shares. Taro announced in March that it was looking for a way to "address significant liquidity issues in a manner that would permit it to remain in existence and continue to grow," the company said.

Taro will become a division of Sun, and 170 Taro scientists will be retained by the company. Taro also has operations in the U.S. and in Canada.

Taro has a strong franchise in dermatology and topical products, in addition to "product baskets" in cardiovascular, neuropsychiatric and anti-inflammatory therapeutic categories, Sun said.

The deal is subject to approval by Taro's stockholders and requisite regulatory clearances. On May 19, Franklin Advisers and Templeton Assets Management, owners of approximately 9 percent of Taro's shares, asked an Israeli court for an injunction blocking the sale. Taro reported May 21 that the Tel Aviv District Court did not issue the requested temporary injunction.

Separately, in March, Sun received approval from Indian authorities to spin off its Innovative Research & Development Division, including its new drug delivery systems unit, and create a company to be known as Sun Pharma Advanced Research Company.

On May 18, Sun reported earnings for the fourth quarter and financial year ending March 31, 2007. For the year, net sales were Rs. 21.3 billion ($527.6 million), an increase of 30 percent from the prior year. Net profit was Rs. 7.7 billion ($191.6 million), a 35 percent increase over 2006.

- Shirley Haley

This article is reprinted from "The Pink Sheet" DAILY – May 22, 2007

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