Taro Pharmaceutical Industries Ltd. (Pink Sheets: TAROF) is seeking the support of its shareholders against what it calls attempt the by India's Sun Pharmaceutical Industries Ltd. (BSE: 524715) "to seize control of your company by waging a proxy fight to gain control of Taro’s board." In a letter to shareholders ahead of the general meeting on December 31, 2009,Taro said that Sun has been trying to increase its stake in the company by attempting to exercise warrants.

Taro states that when Sun Pharmaceutical refused to offer a price that Taro's independent financial advisors considered adequate, Taro terminated the merger agreement, and that Sun then initiated actions to gain control of the company by other means, including legal action in the Israeli courts.

Taro tells its shareholders, "We are concerned that, if Sun seizes control of Taro, minority shareholders may fall victim to the same fate as the minority shareholders of another Sun-controlled public company, Caraco Pharmaceutical Laboratories Ltd. (AMEX: CPD)." Caraco was effectively shut down when US federal marshals seized Caraco’s inventories for failure to comply with FDA regulations, and the company's chairman resigned.

Taro claims that it has had a dramatic turnaround in its business since 2007, when the company agreed to Sun Pharmaceuticals' takeover offer at $7.75 per share. The company claims that it has had steady revenue growth from $252 million in 2006 to $339 million in 2008, and that it swung from a net loss of $86 million in 2006 to a net profit of $29 million in 2007 and $50 million in 2008. It claims that its revenue rose to $257 million in January-September 2009 from $257 million for the corresponding period in 2008, although net profit was unchanged at $33 million.

It also claims to have reduced its debt from $257 million in March 2007 to $58 million in September 2009, while increasing its cash reserves from $45 million at the end of 2007 to $111 million at the end of September 2009.

Taro has not published any financial reports for this period, which would verify these assertions.

Taro urges the shareholders to keep chairman Dr. Barrie Levitt and the current board of directors and reject Sun Pharmaceuticals.

Taro's share closed at $9.22 in New York yesterday.

Published by Globes [online], Israel business news - www.globes-online.com - on December 8, 2009

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