Q&A: Dilip Shanghvi, CMD, Sun Pharma

'We hope this ends the legal battle'

With a positive verdict from Israel's Supreme Court, Sun Pharmaceuticals is readying towards the final step for management control in Taro Pharma, its acquisition target for over three years. In an emailed response, Chairman and Managing Director Dilip Shanghvi tells Business Standard he hopes to close the deal without further delay. Edited excerpts:

Does this signal an end to the three-year legal battle for control over Taro?
We sincerely hope so. The district court in Tel Aviv was extremely critical of the behaviour of Taro and its directors. The Supreme Court has reaffirmed the district court's finding that Taro and its directors had acted in bad faith. We hope the independent directors now stop using Taro resources to support litigation that solely benefit the Levitts in their personal capacity, at the cost of the minority shareholders.

While a request for review by a larger bench of the Supreme Court is possible, from the advice received by us the current case does not appear to qualify. We hope the independent directors don't waste any further resources of the company.

What if the promotor family declines to tender their shares for the price offered by Sun?
We hope better sense prevails, but if it does not, we would decide our next step in consultation with our lawyers.

Why should the offer price of $7.75 be attractive to the Templeton/ordinary shareholders?
There is no force on any shareholder to tender their shares in the tender offer. The offer provision was included as an extremely shareholder-friendly move, to ensure that if in the event Taro's share price remains lower than $7.75 per share, then minority shareholders get an exit option at the same price ($ 7.75) as was being paid to the promoters.

Is there a possibility of revised offer/higher price?
No.

What will,then, be the acquisition cost for Sun, if all outstanding ordinary shares are rendered in the open offer?
Approximately $200 million (including payment to the Levitts).

When do you expect Taro to turn a Sun subsidiary?
Once we get a controlling stake.

Will Sun continue to be a strategic investor in Taro even if it fails to wrest management control?
We haven't given any thought to this, as it appears to be a low probability outcome, considering the Israeli Supreme Court verdict.