Sun Pharma may stick to current offer price for Taro shares

Despite mounting pressure from investors of Isareli company to increase price offered for its remaining stake, may stick to its current offer of $24.50 per share for stake.

Following the opposition from Asset management, another investor, Raging Capital Management LLC, delivered a letter to the board of directors of Taro opposing the proposal by Sun to acquire the remaining outstanding shares of Taro for $24.50 per share.

In his response to the Business Standard query on plans of price rise for Taro shares, a spokesperson said, "Our offer price is $24.5 and will not drop plans to buy the remaining stake."

Sun Pharma, which holds 66 per cent in Taro, announced its plan last month to acquire the remaining stake from Taro investors. According to Sun Pharma, its offer represents 25.96 per cent premium over the most recent closing of Taro's common stock.

In its mail to Taro Board, had demanded a minimum price of $48.5 per each Taro share. However, William C Martin, chairman and chief investment officer, Raging Capital Management, LLC, demanded a price of $71.9 per share.

Analyst believe the process of complete buyout will be time consuming as the negotiation will get hot. Deepak Malik of Emkay Global said, "It will take more time for the deal to conclude. Sun has nothing to lose if the negotiation goes on for more time."

After the legal battle prolonged for three years, Sun had completed the acquisition of controlling stake in the Israeli company in September 2010.

According to estimates, would have to pump in $350 million to $370 million for 15 million outstanding shares with the price of $24.5 per share.

Agreeing to the views of Asset Management, Raging Capital wrote that Sun's latest offer is grossly inadequate and fails to provide full-and-fair value to Taro's minority shareholders.

In his mail, Martin, said, "Based on an average share price for the 60-days preceding the acquisition offer, Sun Pharma's enterprise value was $10.08 billion, or 24 times trailing 12-month ebitda (earnings before interest, taxes, depreciation and amortisation). On a fully consolidated basis, Taro contributed a substantial 30.9 per cent of Sun Pharma's pro-forma ebitda. In contrast, Sun Pharma's offer of $24.50 per share is equivalent to just 10.1 per cent of Sun Pharma's enterprise value.

The relative ebitda contribution from Taro indicates that full value would have to be $71.60 per Taro share in order to equal 30.9% of Sun Pharma's enterprise value. "

Raging Capital urged Taro Board either to appoint an advisor for further negotiation or conduct an auction to identify a buyer willing to pay a fair price.

image
Business Standard
177 22
Business Standard

Sun Pharma may stick to current offer price for Taro shares

BS Reporter  |  Mumbai 

Despite mounting pressure from investors of Isareli company to increase price offered for its remaining stake, may stick to its current offer of $24.50 per share for stake.

Following the opposition from Asset management, another investor, Raging Capital Management LLC, delivered a letter to the board of directors of Taro opposing the proposal by Sun to acquire the remaining outstanding shares of Taro for $24.50 per share.

In his response to the Business Standard query on plans of price rise for Taro shares, a spokesperson said, "Our offer price is $24.5 and will not drop plans to buy the remaining stake."

Sun Pharma, which holds 66 per cent in Taro, announced its plan last month to acquire the remaining stake from Taro investors. According to Sun Pharma, its offer represents 25.96 per cent premium over the most recent closing of Taro's common stock.

In its mail to Taro Board, had demanded a minimum price of $48.5 per each Taro share. However, William C Martin, chairman and chief investment officer, Raging Capital Management, LLC, demanded a price of $71.9 per share.

Analyst believe the process of complete buyout will be time consuming as the negotiation will get hot. Deepak Malik of Emkay Global said, "It will take more time for the deal to conclude. Sun has nothing to lose if the negotiation goes on for more time."

After the legal battle prolonged for three years, Sun had completed the acquisition of controlling stake in the Israeli company in September 2010.

According to estimates, would have to pump in $350 million to $370 million for 15 million outstanding shares with the price of $24.5 per share.

Agreeing to the views of Asset Management, Raging Capital wrote that Sun's latest offer is grossly inadequate and fails to provide full-and-fair value to Taro's minority shareholders.

In his mail, Martin, said, "Based on an average share price for the 60-days preceding the acquisition offer, Sun Pharma's enterprise value was $10.08 billion, or 24 times trailing 12-month ebitda (earnings before interest, taxes, depreciation and amortisation). On a fully consolidated basis, Taro contributed a substantial 30.9 per cent of Sun Pharma's pro-forma ebitda. In contrast, Sun Pharma's offer of $24.50 per share is equivalent to just 10.1 per cent of Sun Pharma's enterprise value.

The relative ebitda contribution from Taro indicates that full value would have to be $71.60 per Taro share in order to equal 30.9% of Sun Pharma's enterprise value. "

Raging Capital urged Taro Board either to appoint an advisor for further negotiation or conduct an auction to identify a buyer willing to pay a fair price.

RECOMMENDED FOR YOU

Sun Pharma may stick to current offer price for Taro shares

Despite mounting pressure from investors of Isareli company Taro Pharma to increase price offered for its remaining stake, Sun Pharma may stick to its current offer of $24.50 per share for Taro Pharma stake.

Despite mounting pressure from investors of Isareli company to increase price offered for its remaining stake, may stick to its current offer of $24.50 per share for stake.

Following the opposition from Asset management, another investor, Raging Capital Management LLC, delivered a letter to the board of directors of Taro opposing the proposal by Sun to acquire the remaining outstanding shares of Taro for $24.50 per share.

In his response to the Business Standard query on plans of price rise for Taro shares, a spokesperson said, "Our offer price is $24.5 and will not drop plans to buy the remaining stake."

Sun Pharma, which holds 66 per cent in Taro, announced its plan last month to acquire the remaining stake from Taro investors. According to Sun Pharma, its offer represents 25.96 per cent premium over the most recent closing of Taro's common stock.

In its mail to Taro Board, had demanded a minimum price of $48.5 per each Taro share. However, William C Martin, chairman and chief investment officer, Raging Capital Management, LLC, demanded a price of $71.9 per share.

Analyst believe the process of complete buyout will be time consuming as the negotiation will get hot. Deepak Malik of Emkay Global said, "It will take more time for the deal to conclude. Sun has nothing to lose if the negotiation goes on for more time."

After the legal battle prolonged for three years, Sun had completed the acquisition of controlling stake in the Israeli company in September 2010.

According to estimates, would have to pump in $350 million to $370 million for 15 million outstanding shares with the price of $24.5 per share.

Agreeing to the views of Asset Management, Raging Capital wrote that Sun's latest offer is grossly inadequate and fails to provide full-and-fair value to Taro's minority shareholders.

In his mail, Martin, said, "Based on an average share price for the 60-days preceding the acquisition offer, Sun Pharma's enterprise value was $10.08 billion, or 24 times trailing 12-month ebitda (earnings before interest, taxes, depreciation and amortisation). On a fully consolidated basis, Taro contributed a substantial 30.9 per cent of Sun Pharma's pro-forma ebitda. In contrast, Sun Pharma's offer of $24.50 per share is equivalent to just 10.1 per cent of Sun Pharma's enterprise value.

The relative ebitda contribution from Taro indicates that full value would have to be $71.60 per Taro share in order to equal 30.9% of Sun Pharma's enterprise value. "

Raging Capital urged Taro Board either to appoint an advisor for further negotiation or conduct an auction to identify a buyer willing to pay a fair price.

image
Business Standard
177 22

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard