Taro Announces Merger Agreement with Sun Pharma
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Insights
The acquisition of Taro by Sun Pharma at a 48% premium to the unaffected price is a significant transaction in the pharmaceutical industry, reflecting a strategic consolidation move. The premium suggests a strong belief in Taro's intrinsic value and future earnings potential. The 13% increase over the initial proposal indicates a competitive negotiation process, which may have been influenced by Taro's recent performance or undisclosed synergies that Sun Pharma expects to realize post-merger.
Investors should note the potential for earnings accretion for Sun Pharma, as the full integration of Taro could lead to cost savings and increased market share, particularly in the generic dermatology market. However, the deal will likely be financed through debt or cash reserves, which could impact Sun Pharma's balance sheet and financial ratios in the short term. The market will also be watching for the realization of the projected synergies that justified the purchase premium.
The merger between Sun Pharma and Taro indicates a trend towards consolidation in the generic pharmaceutical sector, which is currently characterized by intense competition and pricing pressures. Taro's strong presence in the dermatology space complements Sun Pharma's portfolio and could enhance its competitive positioning. The combined entity's operational efficiencies and expanded product offerings may improve its bargaining power with distributors and healthcare providers.
Additionally, the move to take Taro private suggests a long-term strategic vision that might involve significant restructuring or investment, which could be more effectively executed without the scrutiny and volatility of public markets. Stakeholders should monitor how the merger affects the market dynamics and if it triggers further industry consolidation.
The unanimous approval by Taro's Special Committee and subsequent endorsement by both companies' boards underscores the legal diligence conducted in reaching this agreement. The affirmative vote requirement of 75% of the voting power, including a majority of the minority shareholders, indicates a strong effort to ensure fairness and compliance with the Israeli Companies Law.
It's crucial for stakeholders to understand the legal intricacies of such mergers, including the Israeli legal requirements for minority shareholder protection. The involvement of multiple high-profile legal advisors suggests the complexity of the deal and the importance of navigating regulatory hurdles. The successful closure of the merger will depend on meeting these legal conditions, which should be closely observed by investors.
Agreed Price of
Dilip Shanghvi, Managing Director of Sun Pharma, said, "Over the years, with Sun Pharma's strategic interventions, Taro has remained a key player in the generic dermatology market in a challenging environment. 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."
Uday Baldota, Chief Executive Officer of Taro, said, "Taro is committed to delivering high quality products to our patients and customers around the world. This merger will further enable us compete effectively in our products and markets."
The
The merger agreement was unanimously recommended by the Special Committee, which was formed by Taro's Board of Directors to consider Sun Pharma's proposal. Following a comprehensive evaluation of the proposal with assistance from independent financial and legal advisors, the Special Committee determined that the merger agreement and the per share merger consideration are fair and in the best interests of Taro and its minority shareholders.
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.
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
Upon completion of the merger, currently expected to close in the first half of 2024, Taro will become a privately held company and its shares will no longer be listed on the NYSE.
The Special Committee retained BofA Securities, Inc. as its financial advisor, Goldfarb Gross Seligman & Co. as its Israeli counsel and Skadden, Arps, Slate, Meagher & Flom LLP as its
Additional Information About the Merger
Taro will furnish to the
In connection with the proposed transaction, Taro will prepare and mail to its shareholders a proxy statement that will include a copy of the merger agreement. In addition, in connection with the merger, Taro and certain other participants in the merger will prepare and disseminate to Taro's shareholders a Schedule 13E-3 Transaction Statement that will include Taro's proxy statement (the "Schedule 13E-3"). The Schedule 13E-3 will be filed with the SEC and is subject to its review. INVESTORS AND SHAREHOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE SCHEDULE 13E-3 AND OTHER MATERIALS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT TARO, THE MERGER, AND RELATED MATTERS. Shareholders also will be able to obtain these documents, as well as other filings containing information about Taro, the merger and related matters, without charge from the SEC's website (http://www.sec.gov) and Taro's website (http://www.taro.com).
Sun Pharma will furnish the necessary details of the transaction as per the requirements under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Taro and its directors and certain of its executive officers and other employees may be deemed to be participants in the solicitation of proxies from Taro's shareholders with respect to the proposed merger. Information regarding the persons who may be considered "participants" in the solicitation of proxies will be set forth in the Schedule 13E-3 and proxy statement when filed with the SEC.
This announcement is neither a solicitation of proxy, an offer to purchase nor a solicitation of an offer to sell any securities, and it is not a substitute for any proxy statement or other materials that may be filed with or furnished to the SEC should the proposed merger proceed.
About Sun Pharmaceutical Industries Limited (CIN - L24230GJ1993PLC019050)
Sun Pharma is the world's fourth largest specialty generics company with presence in Specialty, Generics and Consumer Healthcare products. It is the largest pharmaceutical company in
About Taro Pharmaceutical Industries Ltd. (NYSE: TARO)
Taro Pharmaceutical Industries Ltd. is a multinational, science-based pharmaceutical company dedicated to meeting the needs of its customers through the discovery, development, manufacturing and marketing of the highest quality healthcare products. For further information on Taro Pharmaceutical Industries Ltd., please visit the Company's website at www.taro.com
Forward-Looking Statements
This announcement contains forward-looking statements, including, but not limited to, the anticipated timing of closing the transaction and statements regarding the funding and consummation of the transactions. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements involve factors, risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements. Such factors, risks and uncertainties include the possibility that the merger will not occur on the timeline anticipated, or at all, if events arise that result in the termination of the Agreement, or if one or more of the various closing conditions to the merger are not satisfied or waived, or if the regulatory review process takes longer than anticipated and other risks and uncertainties discussed in documents filed with the SEC by the Company as well as the Schedule 13E-3 and the proxy statement to be filed by the Company. All information provided in this press release is as of the date of the press release, and the Company undertakes no duty to update such information, except as required under applicable law.
Further information on these and other factors is included in filings the Company makes with the SEC from time to time, including the section titled "Risk Factors" in the Company's most recent Form 20-F, as well as the Form 6-K and Schedule 13E-3 (which will include the proxy statement) to be filed by the Company. These documents are available (or will be available when filed) on the SEC Filings section of the Investor Relations section of the Company's website at: https://taro.gcs-web.com/.
Investor Relations Contacts
Sun Pharmaceutical Industries Limited
Investor Contact:
Dr. Abhishek Sharma
Tel: +91 22 4324 4324, Xtn 2929
Tel Direct: +91 22 4324 2929
Mobile: +91 98196 86016
E-mail: abhi.sharma@sunpharma.com
Media Contact:
Gaurav Chugh
Tel: +91 22 4324 4324, Xtn 5373
Tel Direct: +91 22 4324 5373
Mobile: +91 98104 71414
E-mail: gaurav.chugh@sunpharma.com
Media Contact (US):
Janet Metz
Mobile +1 609-389-3044
E mail: janet.metz@sunpharma.com
Taro Pharmaceutical Industries Ltd.
Contact:
William J. Coote
VP, CFO
(914) 345-9001
William.Coote@taro.com
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SOURCE Sun Pharma
FAQ
What is the purchase price per share for the merger agreement?
What is the premium percentage over the unaffected price on May 25, 2023?
When is the merger expected to close?
What will happen to Taro's shares upon completion of the merger?
