Taro to merge with Sun Pharma in $350 million deal

Sun Pharmaceutical Industries Limited and Israel-based Taro Pharmaceutical Industries Ltd have entered into a definitive merger agreement under which Sun Pharma, already Taro’s controlling shareholder, will acquire all outstanding ordinary shares of Taro for $43 per share in cash. At $38 a share, the offer is estimated to be worth around $350 million

The purchase price is at a 48 per cent premium over the taro stock’s closing price of $28.97 per share on 25 May 2023, the last trading day before Sun Pharma first submitted its non-binding proposal. The purchase price also 13 per cent above the purchase price of $38 per share proposed on 26 May 2023.

Sun Pharma already owns about 78.5 per cent equity stake in Taro.

A special committee set up by Taro’s board of directors made a comprehensive evaluation of the proposal with assistance from independent financial and legal advisors and determined that the merger agreement and the per share merger consideration are fair and in the best interests of Taro and its minority shareholders. Taro’s audit committee also approved the proposal.

Following this, both Taro’s board and the board of directors of Sun Pharma unanimously approved the definitive merger agreement.

The merger, however, is subject to various closing conditions, which include, among others, the approval by the shareholders representing at least 75 per cent of the voting power of the company's shares, including majority of the voting power of such shares held by other than Sun Pharma and its affiliates or any other holders having a personal interest (under the Israeli Companies Law) in the merger.

“Over the years, with Sun Pharma’s strategic interventions, Taro has remained a key player in the generic dermatology market in a challenging environment. Post completion of the merger, the combined entity will firmly move forward, leveraging its global strengths and capabilities to better serve the needs of patients and healthcare professionals,” Dilip Shanghvi, managing director of Sun Pharma, said.

“Taro is committed to delivering high quality products to our patients and customers around the world. This merger will further enable us compete effectively in our products and markets,” Uday Baldota, chief executive of Taro, said.

Upon completion of the merger, which is expected to close in the first half of 2024, Taro will become a privately held company and its shares will no longer be listed on the NYSE.

Sun Pharma is the world’s fourth largest specialty generics company with presence in Specialty, Generics and consumer healthcare products. It is the largest pharmaceutical company in India and is a leading generic company in the US as well as Global Emerging Markets. 

The company’s operations are vertically integrated, with manufacturing facilities spread across six continents and a presence in over 100 countries.