Israel’s Taro has responded ferociously to a hostile bid from Sun Pharmaceutical Industries, with which it had a now-terminated merger agreement, by saying the Indian drugmaker is making a “sham” offer.

The dispute between the two firms has been growing ever since May when Taro pulled out of the $454-million merger agreement with Sun. A year before, the latter’s $7.75 per share offer had been accepted but since then attempts to actually conclude the deal failed. Sun later upped its offer to $10.25 but Taro’s board said that was also “financially inadequate”.

There followed an exchange of angry letters about whether Taro had the right to terminate the deal and Sun then came in with its hostile bid, at the original $7.75 per share. Taro has again dismissed this offer, which is a “sham because we believe Sun knows that it will not be accepted by the shareholders”.

It is far below both the current market price of Taro’s shares and the price Sun paid to acquire other blocks of the company’s shares in recent privately-negotiated transactions, the Israeli firm argues. Also the board says it has been advised by counsel that the offer is in violation of the Israeli Companies Law.

In a letter to stockholders recommending that they do not tender any of their shares, Taro chairman Barrie Leavitt tears into Sun’s bid, saying that it is “absurdly low, unfair, financially inadequate, unilateral, coercive, illegal [and] it is not the best we can do”. He reiterated points made in previous letters that Sun’s offers have not reflected “the dramatic operational and financial turnaround that the company had achieved over the last year or its improved future prospects”.

Two other suitors for Taro
Dr Leavitt added that since Taro terminated the original merger deal, at least two potential purchasers have expressed interest “at a price level in excess of the highest price Sun has ever indicated a willingness to pay”. He went on to say that “we are not opposed to a sale of the company” but “we believe that superior and fair values are attainable”.