Scene 3, act IV
Brandes sides with Templeton in Taro fight
Brandes Investment Partners, which owns 10.8% of Taro, will oppose its sale to Sun Pharmaceuticals.
Gitit Pincas 8 Jul 07 13:27
Brandes Investment Partners LP is joining Templeton in opposing the sale of Taro Pharmaceutical Industries Ltd. (Pink Sheets: TAROF.PK) to India’s Sun Pharmaceutical Industries Ltd. (BSE: 524715).
Brandes Investment Partners, headquartered in San Diego, manages $125 billion on behalf of institutional and individual investors, and owns 10.8% of Taro. The company announced on Friday, “We have reviewed the terms of the proposed merger and the transactions contemplated by the merger agreement dated May 18, 2007 between Taro and subsidiaries of Sun Pharmaceutical Industries Ltd. detailed in the notice to shareholders dated June 8, 2007. Brandes intends to vote against the merger proposal at the shareholders meeting to be held on July 23, 2007 as we believe that the price offered by Sun for Taro shares is too low, the transactions contemplated by the merger are significantly dilutive, and the merger proposal is not in the best interest of shareholders. We also believe that other alternatives exist, including the potential for a shareholder supported rights offering that may be superior.
“Furthermore, we are aware of the petitions and motions submitted to the Tel Aviv District Court on behalf of Franklin Advisors, Inc. and Templeton Asset Management Ltd. and endorse their legal efforts for the opening motion for the removal of oppression of the minority shareholders and the opening motion to declare the private allotment of shares to Sun null and void. We also support the request to appoint a special temporary administrator for Taro.”
Given Brandes’ 10.8% stake in Taro, its opposition to the sale is significant, but immaterial, as it cannot tip the balance in the Taro shareholders’ vote on the merger. This is because there will be three votes at the meeting, and only the third vote is by all shareholders, and they will probably not be able to overcome Taro’s controlling shareholders who will vote in favor of the deal: chairman Barry Levitt, and the Moros family, who own 13.4% of the company; and Alkaloida, a Hungarian subsidiary of Sun Pharmaceuticals, which owns 18.6%.
Sun Pharmaceuticals is due to pay $230 million in cash for Taro at $7.75 per share. Sun Pharmaceuticals earlier invested $41 million in Taro at $6 per share, after which Taro admitted that it would have gone bankrupt without the injection, and would not have been able to serve its debt to bondholders and the banks. Sun Pharmaceuticals has also undertaken Taro’s debts, which will increase the takeover price to almost $500 million.
In the event that the shareholders vote against the deal, Taro said, “Under these circumstances the company will cease to exist. It will become insolvent, enter into a stay of proceedings, or be liquidated.”
Published by Globes [online], Israel business news - www.globes.co.il - on July 8, 2007
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