Mumbai, Feb. 8: Taro Pharmaceutical Industries Ltd and Sun Pharmaceutical Industries Ltd today announced that they had decided to terminate their merger agreement entered last year.
Taro is a subsidiary of Sun Pharma. The Dilip Shanghvi-promoted Sun Pharma owns over 66 per cent in the overseas company.
Sun Pharma had plans to merge Taro with itself after buying out its remaining shareholders. It had offered cash payment of $39.50 per share to acquire the residual stake.
A statement from the Israel-based subsidiary today said both had mutually agreed to terminate their merger agreement announced in August last year.
"Each of Sun Pharma and Taro agreed that terminating the merger agreement was in the best interests of the respective companies and shareholders," Taro added, without specifying the reason behind the termination.
However, informed sources said that the merger was terminated as some investors, including hedge funds, opposed the move.
Last August, Sun Pharma had raised the offer price for mopping up the residual stake in the generic drugs maker.
Earlier, it had offered a price of $24.50 a share, which was rejected by the Taro board. At the price of $39.50, Sun Pharma would have had to shell out over Rs 3,000 crore to completely buy out the NYSE-listed company. Sun Pharma acquired Taro in 2010 after a tough battle. Taro's financial performance has improved since the acquisition.
Taro recently declared strong third-quarter numbers with profits rising to $88.8 million from $62.4 million in the corresponding period last year. Net sales jumped 25 per cent to $185.7 million.
Taro's robust performance was one of the reasons why Sun Pharma reported a 31.87 per cent jump in its consolidated net profit at Rs 881.30 crore for the third quarter ended December 31. The company had a net profit of Rs 668.30 crore in the same period of the previous fiscal.