The court comprehensively rejected Taro’s contention that India’s Sun should have submitted a “special tender offer” to proceed with the acquisition under Israeli law.
Presiding judge Michal Agmon-Gonen said that it was "disingenuous" for Taro's directors to claim now, over a year after they approved the transaction, that a special tender offer was required.
The court also stated that the directors should have "studied the agreements" prior to their being signed, and should have confirmed then that they were in the company's best interest.
The Indian firm said that as a result its subsidiary Alkaloida Chemicals, through which it is carrying out the purchase, will file an amendment to its tender offer for Taro that waives several conditions of the offer, including one that Taro’s controlling shareholders “have performed their obligations under their option agreement with Sun.”
Sun added that, following the closure of the offer, all conditions to its option to acquire all Taro shares from the controlling shareholders will be satisfied.
Dilip Shanghvi, Sun’s chairman said, "It is clear based on [the] ruling that the lawsuit by Taro's independent directors was part of a calculated effort by Barry Levitt to avoid living up to his obligations under the Option Agreement. It is time for Dr. Levitt and his family to live up to the contract and do what is required of them under the Option Agreement."
Taro had not responded to in-PharmaTechnologist.com’s questions at the time of going to press.
Long running takeover battle
In 2007, the two companies entered into a merger agreement that would see Sun invest more than $400m in cash-strapped Taro. The Israeli firm had been struggling since 2003 when it was required to restate its books after the discovery of errors in its estimation of charge-backs from wholesalers.
Since then Taro has sought to extricate itself from the agreement. In June, for example, Taro announced that it had terminated its deal with Sun, on the basis that it was "no longer in the best interests of the company."
The Israeli group also planned to sell its facility in Roscrea, Ireland to a group of investors, claiming that the facility was costing it around $800,000 a month to operate.
At the time Sun, which already held around 34 per cent of the Israeli firm, disputed the termination of the deal and adding that it would not "stand by idly if Taro pursues actions contrary to the merger agreement to strip the company of assets of strategic importance."