Taro rally stokes speculation of Sun takeover failure

Mumbai-based drug maker Sun Pharmaceutical owns 61% of Taro

Taro Pharmaceutical Industries’ rally this month has pushed shares 18 per cent above Sun Pharmaceutical Industries’ buyout offer price, stoking speculation the planned takeover of the Israeli healthcare company won’t succeed.

Taro rose 0.3 per cent to $47.93 yesterday in New York, extending its advance in December to four per cent and its 2012 rally to 62 per cent. The Bloomberg Israel-US Equity Index of the largest New York-traded Israeli companies dropped 0.5 per cent to 86.16, trimming its 6.1 per cent annual climb. Partner Communications Co and Mellanox Technologies Inc slumped.

Sun Pharmaceutical, the Mumbai-based drugmaker that owns 61.1 per cent of Taro, said on August 13 that it’s seeking to take the Yakum, Israel-based company private by buying the remaining shares at $39.50 apiece. Taro, which sells 84 per cent of its products in the US, including treatments for head lice and skin discolouration, said last month that second-quarter sales rose 16 per cent to $161 million.

 

“I don’t see how they get a majority of the minority” shareholders approving the takeover at these price levels, William Martin, chief investment officer of Raging Capital Management LLC, which oversees $275 million in assets, including Taro shares, said by phone from Rocky Hill, New Jersey, yesterday. The “high quality business” is “very strategic to Sun in terms of entering the North American market,” he said.

William Coote, Taro’s treasurer based in Hawthorne, New York, declined to comment on whether Sun’s offer would go through when contacted by phone yesterday. Mira Desai, a Sun Pharmaceutical spokeswoman in Mumbai, declined to comment when contacted by e-mail.