Sun Pharma revises offer to buy outstanding shares of Taro Pharma; stock falls

Shares of Sun Pharma Industries Ltd fell on Tuesday after the pharmaceuticals major updated the offer price to buy outstanding shares of its U.S.-based arm Taro Pharma. The company proposes to acquire outstanding shares of Taro’s at $43 apiece, up from $38 per share announced earlier.

Following the announcement, the shares opened a gap up but soon fell to an intra-day low of ₹1,236.25, taking its m-cap down to ₹2.9 lakh crore. At the current share price, Sun Pharma shares are trading 1.5% down from the 52-week high touched on December 6, 2023.

"The company engaged in multiple rounds of price negotiations with a special committee of the board of directors of Taro regarding the proposal. Such negotiations resulted in the company communicating to the special committee updated terms pursuant to which the company has proposed to acquire all of the outstanding shares of Taro’s ordinary shares, other than any shares held by the company or its affiliates, for a purchase price of $43 per share in cash," the company says via a stock exchange filing.

On May 26, 2023, Sun Pharmaceutical delivered a letter to the board of directors of Taro Pharmaceutical Industries that contained a non-binding indication of interest to acquire all of the outstanding ordinary shares in Taro, other than any shares already held by the Company or its affiliates, for a purchase price of $38.00 per share, in cash.

On December 10, 2023, the company's special committee confirmed that it agreed in principle with the revised proposal and agreed to negotiate definitive terms. "Negotiations regarding definitive terms and agreements for the Revised Proposal are ongoing, and no assurances can be given that a definitive agreement will be reached," the statement said.

Shares of Taro Pharmaceutical Industries closed 0.11% up at $37.93 on the New York Stock Exchange on Monday. The shares of risen 2.79% in the past week and 9.47% in the path week.

Established in 1950, Taro Pharmaceutical is a multinational science-based pharmaceutical company that develops, manufactures and markets generic and branded prescription and over-the-counter (OTC) pharmaceutical products. Taro develops, manufactures and markets prescription and OTC pharmaceutical products primarily in the United States, Canada and Israel. Its primary areas of focus include pediatric creams and ointments, liquids, capsules and tablets, mainly for the dermatological, topical, cardiovascular, neuropsychiatric and anti-inflammatory therapeutic categories.

Sun Pharma reported gross sales worth ₹12,003 crore in Q2 FY24, a growth of 11% vs Q2 last year. Its India formulation sales were at ₹3,842 crore, up 11.1% vs Q2 last year, while the US formulation sales were at $430 million, up 4.2% vs Q2 last year. EBITDA came out at ₹3,179 crore, up 7.5% vs Q2 last year, while the margin for Q2 was at 26.1% vs 27% for Q2 last year. The company reported net profit worth ₹2,375 crore, up 5% YoY.