Give in or else, Sun warns Taro directors

Sun Pharmaceutical Industries, which has been fighting for control of Israel’s Taro Pharmaceutical, has opened a new war front.

For the first time, Sun’s Chairman and Managing Director, Dilip Shanghvi, has directly warned the professional directors on Taro’s board against siding with its founder-promoter-chairman, Barrie Levitt.

In a letter to the five directors, Shanghvi said he would take all necessary legal action to reverse the “cynical attempt by the promoter Levitt family to reward you” with the funds of Taro Pharmaceutical.

He said the ongoing legal proceedings against Sun by Taro are completely untenable, noting that an overwhelming majority of Taro’s public shareholders demand a change in the control of Taro and the composition of its board of directors, following the outcome of the annual general meeting on December 31.

In the AGM, 78 per cent of minority shareholders, including Sun, had voted against the re-election of the existing directors. Sun Pharma is the largest shareholder in Taro, with over 36 per cent stake. Templeton Asset Management, which holds a 10 per cent stake, had urged shareholders to vote against the Taro board.

Sun has been locked in a bitter legal takeover battle with Taro’s promoters since 2008. “It has been apparent to Sun from the beginning that your real interest in commencing the various litigations on behalf of Taro against Sun was and remains your misplaced and unexplained desire to help only the Levitt family avoid their contractual obligation to ell their shares in Taro to us,” charged the Sun Pharma chief.

Shanghvi said these litigations have done nothing to advance the interests of the “silent minority shareholders” of Taro.

“In light of these results, and with any residual sense of your fiduciary duties as directors, we expect that you will now reconsider and reverse your position regarding these actions,” said the letter addressed to Arye Barak, Heather Douglas, Micha Friedman, Eric Johnston, Gad Keren and Myron Strober.

If they failed to do so and continued to provide active support to the Levitt family, that will constitute a further breach of the Board’s fiduciary duties to Taro, as well as its shareholders, concluded the Sun Pharma chief.