Mumbai, Dec 18 (Inditop.com) Drug maker Sun Pharma Friday asked shareholders of Israel’s Taro Pharmaceuticals, with which it is locked in a bitter takeover battle, to vote against the current board’s re-election at the upcoming annual general meeting.
In a letter to Taro’s shareholders, Sun Pharma chairman and managing director Dilip Sanghvi said the Israeli company’s board was keeping the public shareholders in the dark, having not produced audited financial results between 2006 and 2008.
In a scathing attack on the promoters of Taro, the Levitt and Moros family, Sanghvi said the Taro board was either incompetent or hiding something.
The Indian pharma major also also said that under the existing board, Taro’s share prices had decreased 86 percent resulting in an erosion of $1.6 billion in value.
“Six years ago, Taro was 1.5 times more valuable than Sun. Today, Sun is 17 times more valuable than Taro. In these past six years, Taro’s share price has decreased 86 percent,” said Sanghvi in his letter.
“This represents a direct loss of $1.4 billion to shareholders outside the Levitt-Moros family, whose interests are purportedly being protected by Taro’s board,” he said.
“Over that same time, Sun’s share price increased 406 percent, leading to a $5.1 billion increase in value for Sun shareholders.”
Sun Pharma, which has acquired about 36 percent in Taro, is now attempting to acquire a majority stake through a tender offer, triggered by an option that was part of a merger agreement reached in 2007.
Taro had backed out from a $454-million merger deal, stating that its fortunes had turned around since the merger decision.
Following this, Sun Pharma sued Taro in the Supreme Court of New York for breach of agreement while Taro challenged the validity of the tender offer in Israel’s courts.
Sun’s attempts at getting a majority stake in Taro got a shot in the arm earlier this week, when the second-largest minority shareholder, Templeton Asset Management, said it would vote against re-electing the current board at the annual general meeting.
Templeton’s executive chairman Mark Mobius had said Taro’s current board and management were incompetent and did not deserve to remain in charge of company’s affairs.
Sanghvi said Taro chairman Barrie Levitt along with other board members were spreading rumours about Sun’s intentions including fuelling fears that minority or individual shareholders would be forced to sell their stake.
“Contrary to the impression being created by Barrie Levitt, there is no compulsion on minority shareholders to tender their shares into the offer,” he said in his letter.
“While Sun stands committed to accepting all shares tendered in the offer, even if zero shares are tendered, it is members of the Levitt or Moros family that will be obligated to transfer their Taro shares to Sun upon the closing of the offer as per the agreement they signed,” Sanghvi said.
“Hence, it is in the interest of the Levitt-Moros family to prolong the close of the tender offer.”
