Sun shines as Taro shareholders slam board re-election

In a major boost to India's Sun Pharma, which is locked in a takeover battle with Taro, shareholders of the Israeli drug firm today rejected a proposal to re-elect directors.

The shareholders have also turned down a new indemnification proposal by the Taro board, Sun Pharma said in a statement.

Sun Pharma is the single largest shareholder in Taro with 36 per cent stake and it has been trying to take control of the company ever since their $454-million merger deal of 2007 was unilaterally terminated by the Israeli firm a year later.

"Shareholders voted decisively against the election of Taro's external director nominees," Sun Pharma said.

Taro shareholders holding over two-thirds of its equity want to remove the Levitts (promoter family) and their associates from the board, it said.

Commenting on the development, Sun Pharma Chairman and Managing Director Dilip Shanghvi said: "With such an unambiguous rejection by minority shareholders, the Levitts and Taro directors now have lost this only crutch."

It is time Levitts, who own a mere 12 per cent of Taro's equity, hear the voice of the minority shareholders and stop relying on their special founder shares to decide who will manage Taro, he added.

Reacting to the shareholders decision, Templeton Asset Management Executive Chairman Mark Mobius told TV news channel: "We expect Sun management, which is most capable to take over the management of the company (Taro)."

Taro had called for the annual general meeting on December 31 to re-elect its existing board besides seeking approval of a new indemnification proposal, which gives undertaking by the company to shareholders to compensate for any possible damage or loss.

Sun had also launched an open offer to acquire the remaining shares of Taro, including those held by its promoters the Levitt family.

The move was challenged by the Taro's director in the court and the Supreme court of Israel has prohibited Sun from closing the open offer untill the issue is resolved.