Israel's Taro Pharmaceutical and India's Sun Pharmaceutical have decided to walk away from their planned merger, a deal that has been in the making since 2007 and reportedly valued at around $685 million.

Sun already owns just over 66% of Taro stock, but in a short statement released Friday, the firms said it was mutually agreed that terminating the full merger agreement "was in the best interest of the respective companies and shareholders".

Taro had finally agreed to Sun's offer of $39.50 a share for those it didn't own already back in August last year, but various media reports are suggesting that the group's shareholders have now decided to hang on for a better price, given its improving performance.

Taro's second-quarter sales, announced in November last year, jumped 16% to $161 million, and its shares quickly surpassed the offer on the table from Sun.

“As earnings keep coming in stronger and stronger for Taro, there was obviously a lot of disconnect with the price Sun was willing to offer,” said IDFC Securities analyst Nitin Agarwal, according to Bloomberg, noting that it was "fairly unlikely that the deal would have gone through”.