Sun Pharma has revealed its plans to acquire Israel-based Taro Pharmaceutical Industries through a reverse triangular merger, more than a decade after the acquisition was first proposed.
Sun, India's largest drugmaker, first acquired a controlling interest in generics maker in 2010, pursuit to an agreement inked in 2007. In 2013, Sun made another unsuccessful attempt to acquire the remaining shares of the company, but shareholders rejected the offer due to the improved financial performance.
Now, Sun, which already owned 78% of Taro’s shares, has revealed its plans to acquire all remaining shares in an all-cash transaction. According to the agreement, Sun Pharma paid a 31.2% premium over Taro's closing price on May 25, 2023, and a 41.5% premium over Taro's average closing price in the past 60 days.
Under Israeli law, the reverse triangular merger requires Sun to form a wholly-owned subsidiary (SPV), which will enter into the merger agreement with Taro. Following the transaction, Taro will become a fully owned subsidiary of Sun Pharma, and its shares will no longer be listed on the New York Stock Exchange.
Taro was first established in 1959, the company has over over 180 drugs being sold worldwide. In 2020, it agreed to pay more than $400 million to settle Department of Justice allegations that the drugmaker it conspired to fix the prices of generic drugs, becoming the fifth pharmaceutical company to admit to the allegations.