Grand Slam Asset Management rejects Sun Pharma’s sweetened offer for Taro

The acquisition of Taro Pharmaceutical Industries Ltd by Sun Pharmaceutical Industries has run into trouble after a minority shareholder of the Israeli dermatology company rejected the sweetened buyout offer from the Indian drugmaker.

Mumbai-based Sun Pharma, the largest Indian drug maker by market capitalization, already owns 66.3 per cent of the ordinary shares in Taro. Sun Pharma had, in October 2011, offered to buy the remaining stake in Taro for $24.50-per-share. (Sun Pharma also holds 100 per cent of the stake held by Taro's founders, representing about 77.5 per cent of the outstanding voting power in Taro).

Haifa Bay, Israel-based Taro had rejected the proposal saying the unsolicited, non-binding offer was inadequate and not in the best interests of Taro's minority shareholders.

Taro's three minority shareholders, Grand Slam Asset Management, Raging Capital and Guardian Point Capital, were seeking a higher premium arguing that the company's sales have improved over the years.

When Sun Pharma made the offer on 18 October 2011, the proposed purchase price represented a 25.96 premium over Taro's closing price on 17 October 2011 and a 23.80 per cent premium over Taro's closing price in the last 60 days.
 
Grand Slam was reportedly seeking around $48 per share, while Raging Capital wanted $106.91, and Guardian Point Capital had valued Taro's share at $75-100.

Taro's management on Sunday agreed to be taken private after Sun Pharma sweetened its offer from $24.50-per-share or $367 million to $39.50 per share (or $571 million) for the remaining stake held by Taro's minority shareholders. (See: Sun Pharma to buy out Israel's Taro for $571 million)

The offer represents a premium of 60 per cent compared to the 25.96 premium offered in October. Taro's stock closed at $41.10 on Friday on the New York Stock Exchange.