More Taro shareholders raise concern over Sun's new offer

IsZo Capital Management LP and Black Horse Capital Advisors LLC, two of the largest minority shareholders of the Israel-based Taro Pharmaceutical Industries Ltd, have come out against Sun Pharmaceutical Industries Ltd’s new offer of $39.5 per share

Last month, the Indian firm had raised its offer price for the remaining shares of Taro by as much as 60 per cent. Sun Pharma, the country’s largest drug maker by market value, holds 66.5 per cent in Taro.

More recently, in a letter delivered to Taro board, IsZo and Black Horse questioned the move of the board to approve Sun’s new offer, just three weeks after the special board had rejected Sun’s previous offer of $24.5 per share. Also, the shareholders have demanded that the board provide each and every document related to the Sun-Taro merger within seven days.

On August 12, the board had approved Sun’s new offer.

In his letter, Brian Sheehy, managing partner, IsZo Capital, wrote: “In contrast to the protracted delay by Taro’s special committee in determining that the previous offer was grossly inadequate, substantially undervalued Taro and was clearly deserving of rejection, Taro’s special committee, audit committee and the board of directors moved quickly to approve the merger agreement, only three weeks after the previous offer was rejected by the special committee.”

“These actions raise serious concerns about the process conducted by Taro’s special committee, audit committee and the board of directors in connection with the merger, “ he added.

Sheehy has asked Taro to provide them copies of each document relating to the merger, the previous offer and the 2011 general meeting, minutes of all meetings of the board of directors, the audit committee and the special committee, list of shareholders, all benefit plans, option agreements, warrants and any other compensation agreements within seven days from August 31.

After Sun’s announcement of new offer, another minority shareholder, Grand Slam Asset Management, had written to Taro shareholders, urging them to reject the offer, saying the price was inadequate.