The purchase of outstanding public shares will allow Sun Pharma to consolidate control over Taro. Sun Pharma currently owns 78.48% in Taro.
In the past, Sun Pharma had faced resistance from Taro’s minority shareholders in its bid to take full control over the company.
As per the definitive agreement, Sun Pharma will pay $43 per share in cash without interest, a 48% premium over the closing price of $28.9 per share on May 25, 2023, the last trading day before Sun Pharma first submitted its non-binding proposal to Taro.
To woo shareholders, the Mumbai-based drugmaker had to sweeten the deal by a 13% increase over the initial proposed purchase price of $38 per share as proposed on May 26, 2023.
Following the completion of the deal, expected to close in the first half of 2024, Taro will become a wholly owned subsidiary of Sun Pharma and its shares will no longer be listed on the NYSE.”Over the years, with Sun Pharma’s strategic interventions, Taro has remained a key player in the generic dermatology market in a challenging environment,” said Dilip Shanghvi, managing director, Sun Pharma.”Post completion of the merger, the combined entity will firmly move forward, leveraging its global strengths and capabilities to better serve the needs of patients and healthcare professionals,” Shanghvi added.
“This merger will further enable us to compete effectively in our products and markets,” Uday Baldota, CEO of Taro said.
Taro, with revenue of ₹4,604.2 crore and net profit of ₹211 crore in FY23, has a portfolio of over 200 products in generic and over-the-counter (OTC) catering to derma, neuropsychiatric, cardiovascular, and anti-inflammatory segments. Around 90% of sales are from North America.
Taro has $1.3 billion in free cash flow cash and zero debt. It has operations in the US, Canada and Israel with over 1,500 employees. It has manufacturing plants in Haifa, Israel; Brampton, Canada; and headquarters and distribution footprint in the US.
Taro’s board appointed a special committee on May 26, 2023 to evaluate Sun Pharma’s non-binding indication of interest to acquire all of the outstanding ordinary shares.
“Following a comprehensive evaluation of the proposal with assistance from independent financial and legal advisors, the special committee formed by Taro’s board has determined that the merger agreement and the per share merger consideration are fair and in the best interests of Taro and its minority shareholders,” Sun Pharma said.
Upon receiving the unanimous recommendation of the special committee, and following unanimous approval by Taro’s audit committee, Taro’s board and the board of directors of Sun Pharma unanimously approved the definitive merger agreement, Sun Pharma added.
The merger is subject to various closing conditions. These include, among other conditions, the approval of the merger by the affirmative vote of shareholders representing at least 75% of the voting power of the company’s shares.
Sun Pharma shares rose 2.8% to close at ₹1335.65 on BSE on Wednesday, while the benchmark Sensex declined 0.4% to end at 71,186.8.
