Sun Pharma plans to acquire 100 per cent stake in Israel’s Taro in all-cash deal

MUMBAI: India’s largest pharmaceutical company Sun Pharma on Saturday proposed to fully acquire Israel-based Taro Pharmaceutical Industries through a reverse triangular merger. The Mumbai-based drug major, which currently owns a 78.48% stake in Taro, will purchase the shares in the all-cash deal for $38 per ordinary share that will be paid in full at the completion of the proposed transaction.

“We believe that the proposed transaction provides a compelling liquidity opportunity for the company’s shareholders and will benefit the company and all of its stakeholders,” the company said in its filing to the Bombay Stock Exchange.

The proposed price reflects a premium of 31.2% over Taro’s closing price on May 25, 2023, and a 41.5% premium over Taro’s average closing price over the previous 60 days. Taro will become a wholly-owned subsidiary of Sun Pharma and will no longer trade on the New York Stock Exchange.

According to the Israeli Companies Law, 1999 (ICL), the all-cash deal will be completed as a reverse triangular merger, in which Sun Pharma will be required to establish a wholly owned subsidiary or SPV that will engage in a merger agreement with Taro.

“We envisage the Proposed Transaction to be consummated in the form of a reverse triangular merger under the Israeli Companies Law, 1999 (“ICL”) and practice,” said the company.“In this context, Purchaser shall form a wholly owned subsidiary (the SPV), which shall enter into a merger agreement with Taro, with the SPV merging with and into Taro and Taro surviving the merger transaction,” it added.

Such transaction structure would benefit all stakeholders of Taro and may be performed in a swift and certain manner, said the company. The proposed acquisition does not include shares held by Sun Pharma and its affiliates.

The agreement must be fully complied with in order for it to become effective. Sun Pharma also needs approval from all relevant regulatory authorities, including Taro’s shareholders, and, if necessary, other parties. The company has not specified any timeline for the completion of the proposed acquisition.