Templeton Asset Management executive chairman Mark Mobius has sent a letter to Taro Pharmaceutical Industries Ltd. (Pink Sheets: TAROF.PK) chairman Barrie Levitt in which he says that the cancellation of the shareholders' meeting, scheduled for July 23, is invalid and calls for the replacement of the company’s management and board.
Mobius said that Templeton was “surprised to learn that you have decided to postpone the shareholders meetings... It seems that the shareholders meetings were cancelled as the results of the meeting would probably have been the rejection of the merger. As we already informed you the cancellation of the meetings is invalid and it should now be assumed that the merger has been rejected by the shareholders. We have already asked that you provide us with the details of those shareholders voting in the meetings (and the way they voted), but this information was not furnished to us yet.
“Templeton and other shareholders have been opposed to the merger, inter alia, because of the lack of full information regarding the financial status of the company, the relatively low price paid for a company operating in this highly attractive sector, and the unequal treatment afforded minority shareholders.
“We found it ironic that in Taro’s announcement of the postponement, you stated that the decision was due primarily to the “confusion” that Templeton has caused. We cannot think of a better example of confusion, than that caused by Taro’s continuing failure to release the legally required audited financial statements, without which it strains investor credulity and sensibility to be asked to vote on a transaction. If there is any confusion it is due to the decision to cancel the meetings on the morning on which they were supposed to be held, and to release a formal announcement of their cancellation afterwards on that day.”
Mobius goes on to say, “We hope that Taro management and its controllers will now take the opportunity to release to the public all relevant documents and data with respect to the merger including the audited financial statements for 2006 and the financial results for the first two quarters of 2007 so that shareholders can properly assess what would be the fair price for Taro shares.
“It is also important for the controllers of Taro to reveal any separate agreements that were made with Sun Pharmaceuticals Industries Ltd. (BSE: 524715), and with their financial advisers regarding the share sale, if there are any, or to confirm that there are none. We urge Taro's Management to discuss and furnish information to the minority shareholders and to explore possible alternative transactions, including inviting other financial and strategic investors to review this investment opportunity.
“Existing shareholders have the right to, and are determined to, participate in the revival of Taro by participating in any restructuring effort. We believe all shareholders should be given the same opportunity. We feel that selling shares to Sun at $6 per share is discriminatory to minority shareholders. We are willing, subject to proper due diligence, to inject further capital at $6 which is the same price that you are giving to Sun Pharmaceuticals.”
Mobius concludes by urging “replacement of management and board of the company, since the current management has failed to meet certain basic standards of corporate governance. We need to see more management changes rather than only the dismissal of the CFO which took place in 2006. The replacement of the management and the board who have failed to represent shareholders interests fairly would provide the necessary ground for a new beginning.”
Published by Globes [online], Israel business news - www.globes.co.il - on August 1, 2007
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