Israel's Supreme Court has accepted the stance of Indian drug company Sun Pharmaceutical Industries in its legal dispute with Taro Pharmaceutical Industries Ltd. (Pink Sheets: TAROF) of Haifa. On Wednesday, Justices Ayala Procaccia, Miriam Naor, and Elyakim Rubinstein, confirmed a ruling by a lower court against Taro, to the effect that Sun is not obliged to make a special offer to purchase in order to acquire the controlling interest in Taro. This enables Sun to acquire the shares belonging to the families of Taro's founders, including those of company chairman Dr. Barrie Levitt.
In 2007, against a background of severe liquidity problems, Taro signed an agreement for the sale of the entire company to Sun for $7.75 per share. As Taro's results improved, its share price rose, and a few months after signing it, Taro cancelled the agreement, and the two sides resorted to litigation.
The judges said that the arguments of the appellants, among them Taro and its directors, exhibited a lack of bona fides. "They benefitted from Sun's investment, and from the fact that the injection of capital into Taro by Sun saved it from collapse and led to its rehabilitation and a substantial rise in the value of its stock," the judgment states. "Their claim about an obligation on Sun's part to make a special offer to purchase arose only when the company had recovered."
The judges awarded Sun costs of NIS 70,000.
In a recent interview with "Globes", Sun chairman Dilip S. Shanghvi said that Taro's directors had betrayed their responsibility. "The board is doing all it can to protect the major shareholder, Barrie Levitt, and not the interest of all the shareholders equally." Shanghvi did not rule out the possibility of a personal lawsuit against the directors and Levitt, if Sun won control of Taro. "We will consult legal counsel, and decide on the best course of action," he said.
Taro is traded on the Pink Sheets in the US at a market cap of $450 million.
Published by Globes [online], Israel business news - www.globes-online.com - on September 12, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010
Published by Globes [online], Israel business news - www.globes-online.com - on September 12, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010