Mumbai: Concerned with the recent move of key investor and 10% shareholder Templeton Asset Management Company Ltd to support India’s Sun Pharmaceutical Industries Ltd to take control of Taro Pharmaceutical Industries Ltd, the Israel-based Taro has sought the backing of its shareholders to fight a proxy fight of the Indian company.
Taro, in a letter addressed to its shareholders on Tuesday, said it’s an attempt by India’s Sun Pharmaceutical to seize control of your company by waging a proxy fight to gain control of Taro’s board,” according to a report Israel’s business newspaper Globe.
Taro has appealed to its shareholders that Sun has been trying to increase its stake in the company by attempting to exercise warrants. When Sun Pharmaceutical refused to offer a price that Taro’s independent financial advisors considered adequate, Taro terminated the merger agreement, and that Sun then initiated actions to gain control of the company by other means, including legal action in the Israeli courts, Taro management stated. Hence, Taro urged the shareholders to keep its present chairman Barrie Levitt and the current board of directors, and reject Sun Pharmaceuticals, said the Globe report.
Sun Pharma spokesperson said ”It’s an attempt by Levitt ( Taro promoter and chairman) to take the attention of its shareholders away from a critical resolution to indemnify the company’s independent directors, despite several years’ audited financials not being available.”
Templeton had last week withdrawn its appeal filed in the Israeli Supreme Court against Sun Pharma’s open offer that was launched in the US to buy out additional shares in Taro. Sun Pharma, which holds about 36% stake in Taro, had signed a merger agreement with Taro in 2007. But this agreement was unilaterally terminated by Taro after a year. Taro management had also alleged in the letter to shareholder that, “We are concerned that, if Sun seizes control of Taro, minority shareholders may fall victim to the same fate as the minority shareholders of another
Sun-controlled public company, Caraco Pharmaceutical Laboratories Ltd. ” Caraco was effectively shut down when US federal marshals seized Caraco’s inventories for failure to comply with FDA regulations, and the company’s chairman resigned, Taro stated in the Tuesday letter.