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April 7, 2009
Sun Pharma – Taro Pharma
Deal Dissection
What kicked off as a friendly outbound acquisition by an
Indian company is now being fought as a battle in the
court room. This is one battle which has shaken the two
top pharma corporates of the world and has taken them
through a roller coaster ride. One of India’s leading
drug maker Sun Pharmaceutical Industries Limited (“Sun
India”) would have expanded its base to include another
giant drug making company of Israel i.e. Taro
Pharmaceutical Industries Limited (“Taro Israel”) by way
of a reverse triangular merger. Strikingly, what was
supposed to be the second largest outbound acquisition
by an Indian company in the pharma space is now into
disputed waters.
Sun
India intended to acquire Taro Israel with the vision to
increase its portfolio, strengthen its position in USA
and get an entry into the European markets. The
parties executed a series of agreements to accord their
understanding of the merger and also provided for a
back-up arrangement to counter the situation if the
merger fails.
However, Taro Israel witnessed a financial turnaround
converting it from a company in losses to a profit
yielding enterprise which as Sun India contends may be because
of its injection of suitable amount of funding into Taro
Israel by releasing Taro Israel from its debt. This
financial turnaround raised the expectations of Taro
Israel claiming that Sun India’s offer was unjust and
did not reflect the real worth of the company.
It would be interesting to understand the factors attributable to the said behavior of the parties. This M&A Lab dissects the commercial, legal, regulatory and tax aspects with respect to India, Israel, Hungary and U.S.A. For the sake of convenience and better understanding, this M&A Lab is divided into 2 parts – (Part A) Pre termination of Merger Agreements; and (Part B) Post termination of Merger Agreements.
As you would be aware, we have been providing regular information on latest legal developments. M&A Lab is our latest initiative to provide you in depth and knowledge based analysis of latest M&A deals. We will be happy to have your views / comments on our initiative. Please read the disclaimer carefully.
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This M&A Lab provides general information existing at the time of preparation. The M&A Lab is intended as a news update and Nishith Desai Associates neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this M&A Lab. It is recommended that professional advice be taken based on the specific facts and circumstances. This M&A Lab does not substitute the need to refer to the original pronouncements. This is not a Spam mail. You have received this mail because you have either requested for it or someone must have suggested your name. Since India has no anti-spamming law, we refer to the US directive, which states that a mail cannot be considered Spam if it contains the sender's contact information, which this mail does. In case this mail doesn't concern you, please unsubscribe from mailing list. |
