MUMBAI, India, June 25 Sun PharmaceuticalIndustries Ltd. (Reuters: SUN.BO, Bloomberg: SUNP IN, NSE: SUNPHARMA, BSE:524715) today announced that a subsidiary of Sun Pharma has exercised theOption under its Option Agreement to acquire all the shares held by thecontrolling shareholders of Taro Pharmaceuticals Industries Limited (Taro).
On May 18, 2007, Taro and Sun Pharma's subsidiaries entered into a MergerAgreement whereby Sun Pharma's subsidiary would acquire Taro, which the TaroBoard of Directors unanimously approved. At that time, Taro was in a direfinancial crisis and Sun Pharma agreed to invest nearly USD 60 million in cashto save Taro from bankruptcy. In the event the merger was not consummated,Taro's controlling shareholders, led by Taro's Chairman, Barrie Levitt,granted Sun Pharma an option to acquire all their shares, including all of theFounders' Shares of Taro.
Taro purported to terminate the Merger Agreement on May 28, 2008. Pursuantto the Option Agreement, Sun Pharma may exercise its Options within 30 daysafter termination of the Merger Agreement. Although Sun Pharma believes thatTaro's purported termination of the Merger Agreement was improper, it hasexercised the Options to preserve its rights under the Option Agreement andstates that the exercise of the Options shall not in any way be construed tobe an acceptance or recognition of the purported termination of the MergerAgreement. In connection with the exercise of the Options, Sun Pharma will inthe next few days commence a Tender Offer for all Ordinary Shares as requiredby the Option Agreement. The Option Agreement also requires that Sun Pharmaspecifically commence its Tender Offer at USD 7.75 per share.
On the very same day that Taro purported to terminate the MergerAgreement, Taro and the non-Levitt family Directors, who are not signatoriesto the Option Agreement, filed a motion in Israel designed to try to delay andultimately block the consummation of the Option Agreement. This follows acontinuous pattern whereby Dr. Levitt and his Board of Directors delayed theconsummation of the merger by failing to hold the requisite shareholdersmeetings to consider the merger, culminating in the improper termination ofthe Merger Agreement.
Today, Sun Pharma has filed an action in the Supreme Court of the State ofNew York against Taro and its full Board of Directors. The action assertingfraud claims against Taro and its Directors asks the Court to order thecontrolling shareholders to honor their promises under the Option Agreement.In addition, Sun Pharma asks for an order declaring that the Merger Agreementwas not properly terminated.
Mr. Shanghvi, Chairman and Managing Director, Sun Pharma said, "We havehad enough of the delays, excuses and misrepresentation by the Board of Taroand Dr Levitt. In good faith, Sun Pharma complied with its obligations underthe Merger Agreement approved by Taro's Board and is now complying with theterms of the Option Agreement signed by Dr. Levitt and his family. Now it istime for Dr. Levitt and his family to do what is required of them under theOption Agreement. We will do everything required to preserve our rights."
Important Additional Information
This communication is for informational purposes only and does notconstitute an offer to purchase nor a solicitation of an offer to sellOrdinary Shares of Taro Pharmaceutical Industries Ltd. (Taro). Thesolicitation of offers to buy Ordinary Shares will only be made pursuant tothe offer to purchase to be issued in connection with the launch of the tenderoffer (as may be amended or supplemented), the related letter of transmittal,and other related documents that Alkaloida Chemical Company Exclusive GroupLtd. intends to file with the U.S. Securities and Exchange Commission (SEC)and deliver to holders of Taro's Ordinary Shares. Holders of Taro's OrdinaryShares are strongly advised to