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Softening its stance for acquiring the shares of Israel-based Taro Pharmaceutical, Sun Pharma said on Monday it would offer a premium price over the current market rates for the scrip and has also agreed 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 Ltd chairman Dilip Shanghvi said in a letter to the Taro board of directors.
In May, Taro had unilaterally terminated $-454 million merger agreement signed between Taro and Sun Pharma in 2007, citing undervaluations of its shares.
Thereafter, both companies had filed suits against each other in Israel and New York.
Pursuant to the litigation, Sun Pharma had also launched an open offer at $7.75 per share to acquire additional stake in the company, which was again challenged in the Israeli Supreme Court.
The Israeli court has suggested that both parties try to solve the issues through negotiations, while barring Sun Pharma from closing the open offer.
"In accordance with the suggestion of the Supreme Court, Sun's Israeli legal counsel immediately initiated discussion with Taro's legal counsel, and on December 22 presented certain proposals which were in line with Court's suggested resolution," Shanghvi said in the letter.
Sun Pharma has sent two proposals to Taro and its first proposal includes option to increase consideration to $9.50 per share, while asking Taro to withdraw its purported termination of the merger agreement.
It has also asked Taro and its independent directors to withdrew their Israeli appeal and request withdrawal of the corresponding injunction prohibiting closure of the open offer.
It has also offered to increase the payment of open offer to $8.75 per share subject to certain conditions.
Besides, the second proposal includes increasing the offer price to $9 per share and the open offer will close at the earliest. It has also offered to increase the offer to $8.25 per share subject to closure of the open offer.
Sun has also requested withdrawal of the corresponding injunction and withdrawal of the Irish facility litigation.
Meanwhile, in another letter written to Audit Committee chairman Myron Strober, Shangvi has termed the claim of financial turnaround of Taro as 'hollow'.
"Your repetitive claims an 'impressive turnaround' are now confirmed as being hollow," Shanghvi said in a letter.
The so-called performance is largely on account of drastic cuts in research and investments, a sure recipe for disaster for a generic pharma company, he said.