Sun Pharma’s Acquisition of Remaining Stake in Taro

Sun Pharmaceutical Industries has announced its decision to acquire the remaining 21.52% stake in Israel-based Taro Pharmaceutical Industries, facilitating the merger of the two companies. The acquisition, valued at Rs 2,891.76 crore, will further consolidate Sun Pharma’s position in the pharmaceutical industry.

Acquisition Details

Sun Pharma will purchase 8,086,818 shares, constituting the remaining 21.52% stake in Taro, at a cost of Rs 2,891.76 crore. This move comes after Sun Pharma had already acquired a 78.48% stake in Taro. The acquisition will be executed at a price of USD 43 per share in cash without interest, as per the definitive merger agreement.

Strategic Implications

Dilip Shanghvi, Managing Director of Sun Pharma, emphasized the strategic significance of the acquisition, stating that Sun Pharma’s interventions have enabled Taro to maintain its position in the generic dermatology market despite challenges. The merger is expected to enhance the combined entity’s global capabilities, enabling it to better address the needs of patients and healthcare professionals.

Merger Process

Upon completion of the merger, which is anticipated to occur in the first half of 2024, Taro will become a privately held company, and its shares will cease to be listed on the New York Stock Exchange (NYSE). Taro’s CEO, Uday Baldota, expressed confidence that the merger will enhance the company’s competitiveness in various products and markets, reinforcing its commitment to delivering high-quality products worldwide.

Approval Process

The merger agreement received unanimous recommendations from the Special Committee established by Taro’s Board of Directors to evaluate Sun Pharma’s proposal. Subsequently, the merger agreement was unanimously approved by both Taro’s and Sun Pharma’s Boards of Directors.

Premium Offer

Sun Pharma’s offer of USD 43 per share represents a significant premium, with a 48% increase over Taro’s closing price of USD 28.97 per share on May 25, 2023, and a 13% increase over the initial proposed purchase price of USD 38 per share on May 26, 2023.

Market Response

Following the announcement, Sun Pharma shares witnessed a positive trend, trading 1.52% higher at Rs 1,319 apiece on the Bombay Stock Exchange (BSE).

The acquisition of the remaining stake in Taro reaffirms Sun Pharma’s commitment to strategic growth and strengthening its position in the global pharmaceutical market.