BlueMountain Capital Management, LLC Urges Minority Shareholders to Vote For BlueMountain's Independent External Nominees to the

 BlueMountain Capital Management, LLC Urges Minority Shareholders to Vote For
      BlueMountain's Independent External Nominees to the Board of Taro
   Pharmaceutical Industries Ltd. and Against the Re-Election of Incumbent
External Directors and All Interested-Party Proposals Involving Executive and
                            Director Compensation

PR Newswire

NEW YORK, Aug. 26, 2013

NEW YORK, Aug. 26, 2013 /PRNewswire/ --BlueMountain Capital Management, LLC,
on behalf of various funds it manages (collectively "BlueMountain") has
nominated two highly qualified, independent individuals to serve as External
Directors of Taro Pharmaceutical Industries Ltd. ("Taro" or the "Company").
As External Directors serve three year terms the upcoming election represents
a unique opportunity for minority shareholders to dramatically improve the
governance of the Company and to help ensure that it is managed in the best
interests of all shareholders. This opportunity will not recur for another
three years. All minority shareholders need to make their voice heard now.
BlueMountain urges shareholders to vote FOR our External Director nominees
(Proposal 8) and AGAINST Taro's nominees (Proposal 7) on the Company's form of
proxy card.

We also urge minority shareholders to vote against Proposals 1, 3, 4, and 5
regarding executive and director compensation, which under Israeli law are
considered interested-party transactions. Each of these Proposals requires
the support of a majority of the minority of shareholders that actually vote.
Therefore, if a majority of the minority shareholders vote against each of
these Proposals, then each one will not pass.

At our demand Taro added BlueMountain's nominees, Mr. Ben-Ami Rosenfeld and
Ms. Adi Bershadsky, to the Revised Notice of Annual General Meeting of
Shareholders dated August 8, 2013 (the "Proxy Statement" ^ 1). In the Proxy
Statement, Taro stated that its Board of Directors (the "Board") "was not able
to conclude that either of these nominees has 'financial and accounting
expertise'", thus insinuating that our candidates may lack such expertise. In
view of the Board's decision to continue to support only its own nominees, it
may have been in the Board's interest to have refrained at this stage from
confirming our candidates' financial and accounting expertise in an attempt to
dissuade minority shareholders from supporting our candidates. That decision
is notwithstanding the background, education, and talents of these two
distinguished individuals and their affirmative declarations that they possess
the required expertise. We disagree with the Board's conclusion and have
informed the Board that we are of the opinion that it has breached its
fiduciary duties in not actively seeking the information necessary to confirm
the candidates' financial and accounting expertise, information that has been
twice offered to the Board. In any event, the fact that the Board refused to
reach such affirmative conclusion does not in any way disqualify either
candidate from serving as External Director of the Company, nor does it
justify the re-election of the incumbent External Directors, who in our
opinion failed to perform their duties to protect the interests of all

We further believe that Taro has not fully complied with its obligations under
the Israeli Companies Law (the "Companies Law") regarding the implementation
of the voting procedures for this election and has failed to clarify certain
matters in this regard. On August 13, 2013, BlueMountain's Israeli legal
counsel, Adv. Oren Shenkar, sent a letter to Taro requesting clarifications
concerning the Board's deliberations regarding our candidates and the expected
form of the 2013 proxy card. A link to this letter is included as Exhibit C.
On August 20, 2013, we received a reply from Taro's external counsel, a link
to which is included as Exhibit D. As is plainly evident, the response did
not address our questions or concerns. Moreover, the manner in which it
failed to address our good faith questions can only be construed as

Earlier today our Israeli counsel delivered a new letter to Taro's attorney,
which is attached as Exhibit A. It is our opinion that Taro is continuing to
disregard our rights as minority shareholders and our sincere efforts to
introduce to the Board worthy and capable External Directors.

As discussed in detail in this new letter to Taro, we believe the current form
of proxy card is not in compliance with the Companies Law. The form of proxy
card includes endorsements, notably the Board's recommendation that
shareholders vote for the re-election of the current directors and for the
approval of certain other directors' remuneration which, to our understanding
of the Companies Law, should not be included on the card. In addition, the
form of proxy card includes a statement notifying shareholders that if they
fail to issue an instruction to vote "For," "Against," or "Abstain" on a
particular proposal their vote will be cast in favor of the Board's
recommendation on such proposal. In fact, we believe applicable Israeli law
is designed to prevent this kind of discretionary voting on behalf of minority
shareholders and does not permit the shares of minority shareholders to be
automatically voted in favor of the Board's recommendation on proposals where
the shareholder does not issue any voting instruction.

Furthermore, the voting instruction form being used by US brokers for
distribution to the shareholders of the Company fails to include the required
affirmation that the shareholder is not a controlling shareholder and does not
have a personal interest in the applicable resolution. The failure by the
Company to assure that such declaration was included may result in the
disqualification of votes made in this manner under Israeli law.

Not only do we believe that the voting instruction form does not include the
affirmation necessary for compliance with applicable law, but the voting
instruction form is also conveniently very confusing to complete properly.
While we retain all rights to seek remedies on this matter, BlueMountain has
hired a leading proxy solicitation firm, Innisfree M&A Incorporated
("Innisfree"), to help ensure that all minority shareholders are aware of
their rights and to assist them in voting for BlueMountain's independent
External Director nominees.

We ask that all minority shareholders who are seeking to add independent
voices in the boardroom and are committed to looking out for their best
interests to contact Innisfree toll-free at (888) 750-5834 (institutions,
banks, and brokers may call collect at (212) 750-5833) to indicate how they
have voted.

It is important to note that if a shareholder believes that he or she
erroneously voted shares, it is not too late to change the vote. Please
contact Innisfree for help should you be concerned.

We remind shareholders that their votes do not have to be submitted until
September 10, 2013 at 3:00 AM EDT and that they should avail themselves of the
necessary time and resources to make an informed decision and register an
accurate vote. Included with this press release as Exhibit B is a link to an
example of a completed voting instruction form consistent with how
BlueMountain will vote its shares. Given the concerns expressed above, and in
more detail in our letter in Exhibit A, this form may need to be amended and
re-issued as a result of its potential deficiencies. Should the Company issue
a new form, Innisfree will assist shareholders in completing such new form.
For now, out of an abundance of caution, we are assuming that the current
version of the voting instruction form will not be amended and are using it as
our example in Exhibit B. Any shareholder who intends to vote in the same
manner as BlueMountain should complete his or her form consistent with this

Voting on Other Interested-Party Transactions

BlueMountain also wishes to inform fellow minority shareholders that upon
further scrutiny and consideration of the Proxy Statement, we have
additionally decided to vote AGAINST:

 Proposal 1: To approve the Company's Compensation Policy Under the
             Requirements of the Israeli Companies Law 5759-1999;
 Proposal 3: To approve and ratify the remuneration of Mr. Dilip Shanghvi,
             Chairman of the Board of Directors of the Company;
 Proposal 4: To approve and ratify the remuneration of Mr. Sudhir Valia,
             member of the Board of Directors of the Company; and
             To approve and ratify the remuneration of Mr. Subramanian
 Proposal 5: Kalyanasundaram (known in the industry as Kal Sundaram), Chief
             Executive Office of the Company.

As mentioned above, each of these proposals requires a separate vote and
requires the support of a majority of the minority of shareholders that
actually vote. Therefore, if the majority of our fellow minority shareholders
vote against such resolutions, these current non-external and non-independent
directors will not be entitled to receive the proposed remuneration from the

Our reasons for voting against each of the above proposals are:

The Companies Law sets very specific requirements in order for an External
Director to be eligible for election. The goal of these requirements is to
ensure the independence of the candidate and the elimination of conflicts of
interest or other incentives that could impair the objectivity of the External
Director and his or her ability to fulfill his or her fiduciary duty to all
shareholders. For this reason, External Directors sit on the most important
Board committees including the Audit and Compensation Committees. In fact,
each of these committees must be chaired by an External Director. The
External Directors are required to be heavily engaged Board members –
something that if executed properly requires significant time, energy, and
fortitude. Depending on the number of meetings in a given year, we estimate
that an External Director will be paid approximately $40,000 per year. The
reason for this is to ensure that financial motivations do not create a
conflict of interest.

Hence with respect to Proposal 4, which calls for non-External Director Mr.
Sudhir Valia to be compensated with an annual fee of $560,134 and an annual
bonus of up to 100% of his annual fee that could bring his total compensation
to $1,120,268, we do not feel that a non-External Director should be
compensated at approximately 30x the level of an External Director. The
incentive to simply serve at the pleasure of the controlling shareholder is
far too strong. For this reason BlueMountain is voting against Proposal 4.

With respect to Proposal 5, which calls for Mr. Kal Sundaram to be compensated
an annual fee of $500,000 and an annual bonus of up to 100% of his annual fee
that could bring his total compensation to $1,000,000, we acknowledge that
this is not an unreasonable amount for a Chief Executive Officer of his
background and experience. However, BlueMountain objects to the form and
structure of his compensation. Proposal 5 of the Proxy Statement says, "Mr.
Sundaram may devote up to 20% of his time to continue to be employed and
provide services to Sun Pharma [Sun Pharmaceutical Industries Ltd., or "Sun"],
and Taro may pay Mr. Sundaram's compensation either directly to him or through
Sun Pharma." We would have at least expected Taro to pay its own Chief
Executive Officer's salary directly so as to more appropriately align his
interests with those of the Company. This arrangement explicitly creates a
conflict of interest for Mr. Sundaram with respect to minority shareholders
and for this reason BlueMountain is voting against Proposal 5.

With respect to Proposal 3, which calls for Mr. Dilip Shanghvi to be
compensated an annual fee of $869,648 and an annual bonus of up to 100% of his
annual fee that could bring his total compensation to $1,739,296, we believe
this amount is excessive in light of Mr. Shanghvi's non-executive role at
Taro. In addition, Mr. Shanghvi is the founder of Sun and based on publicly
available information, is still a significant owner of that company. Hence he
benefits personally and directly from Taro through the valuation accorded to
Taro through Sun's public market value. If anything, we believe the spirit of
good corporate governance would dictate that Mr. Shanghvi receive de minimis
compensation for his chairmanship of Taro's Board, similar to his predecessor,
the current Chief Executive Officer Kal Sundaram, who received no
compensation. For these reasons BlueMountain is voting against Proposal 3.

With respect to Proposal 1, which calls for the approval of the Company's
Compensation Policy, we observe that the policy has been intentionally drafted
in extremely vague terms. It appears not to comply with the objectives set
forth in Section 267B of the Companies Law, which require that the
remuneration policy is structured to promote the goals of the Company in
accordance with its long-term business plan and create worthy incentives for
the Company's executives based on clearly quantifiable criteria. Moreover,
according to the Proxy Statement, each of Proposals 3, 4, and 5 were deemed to
be "in line with the Company's Compensation Policy." Since we do not agree
with Proposals 3, 4, and 5, we cannot support Proposal 1. Hence BlueMountain
is voting against Proposal 1.

Lastly, we would note that each of Proposals 3, 4, and 5 were approved by the
Audit and Compensation Committees of Taro's Board. The current External
Directors of the Company, whose re-election we believe should be voted down,
are two of the three members of the Compensation Committee and one of them
serves as its chairperson. As such, they should be held accountable for
endorsing policies that, in our opinion, create potential conflicts of
interest between Taro's controlling shareholders and its minority
shareholders, to the detriment of the minority shareholders. When these
decisions are also viewed against the fact that these same External Directors
accepted the $39.50 offer from Sun in August 2012, we believe there exists
clear evidence of a lack of independence on Taro's Board.

We feel that our fellow minority shareholders should know that in spite of the
concerns expressed in this letter, we have reached out to the Company's Board
and urged it to commence a dialogue with BlueMountain and the other minority
shareholders regarding the manner in which the Company should be managed for
the benefit of all shareholders. We intend to continue, in good faith, to
strive for such an understanding; however, we suspect that until the
controlling shareholder and Taro's Board recognize that the interests of the
minority shareholders deserve to be acknowledged and supported, reaching such
an outcome will be difficult. We believe that the best path to ensuring a
level playing field for all shareholders at Taro is for minority shareholders
to exercise their rights to vote AGAINST the re-election of the incumbent
External Directors, to vote FOR BlueMountain's candidates, and to vote AGAINST
the above proposals on remuneration.


BlueMountain Capital Management, LLC
Mary Kate Dubuss
(646) 808-3731

Doug Hesney
(212) 704-7385

Innisfree M&A Incorporated
Scott Winter / Jonathan Salzberger / Larry Miller
(212) 750-5833


^1 See

August 26, 2013
Mr. Cliff Felig, Adv.
Meitar Liquornik Geva & Leshem Brandwein & Co.
16 Abba Hillel St.
Ramat Gan 525608
Dear Mr. Felig,
Re: Taro Pharmaceutical Industries Ltd.
On behalf of my client, BlueMountain Capital Management, LLC ("BlueMountain"),
please find below my response to your letter dated August 19, 2013:
     BlueMountain is deeply disappointed that the Board of Directors (the
     "Board") of Taro Pharmaceutical Industries Ltd. ("Taro" or the "Company")
     has deliberately ignored BlueMountain's requests and failed to address
1.   the concerns expressed in its letters. Specifically, BlueMountain is
     disappointed that Taro has failed to review the qualifications of its
     nominees diligently and in good faith as it is required to do in
     discharging its corporate duties.
     In BlueMountain's letter dated August 1, 2013, BlueMountain proposed to
     provide Taro with any additional information required by the Company's
     Board to examine BlueMountain's nominees' financial and accounting
     expertise. Unfortunately, Taro's Board has ignored this offer, and
     without requesting additional information or contacting these two
     individuals, publicly announced that it was unable to conclude that the
2.   said nominees have financial and accounting expertise. As you know,
     beyond the description of their background, education and skills, Mr.
     Ben-Ami Rosenfeld and Ms. Adi Bershadsky provided the Board with
     affirmative declarations that they possess the required expertise. To
     ignore declarations from these two distinguished individuals without
     requesting additional information or asking questions, exposes the flawed
     nature of the Board's consideration.
     Consequently, BlueMountain approached Taro once again in good faith,
     through the undersigned, in the letter dated August 13, 2013. In that
3.   letter, BlueMountain again offered to provide any additional information
     required to demonstrate the candidates' financial and accounting
     expertise and offered to have the candidates appear before the Board.
     Taro's response, in which it asserted that it "does not understand the
     basis for [BlueMountain's] assertion that there may be additional
     information regarding these nominees that may also be relevant to Taro's
     shareholders" [emphasis added – O.S.] and that "any such additional
     information should have been included in the material that [BlueMountain]
4.   already sent to Taro," is completely nonresponsive, since the additional
     information is clearly not required by the shareholders (who can well
     evaluate the impressive background, education, skills, experience, and
     knowledge of BlueMountain's nominees based on the information already
     delivered to the Company), but rather by Taro's Board, in order for it to
     be able to discharge its legal duty to review and determine each
     nominee's financial and accounting expertise. 
     In fact, the Board was obligated to approach BlueMountain or the
     candidates of its own accord, to obtain any additional information it
5.   required in order to confirm their expertise. The failure to discharge
     such duty constitutes, in our opinion, a clear breach of the Board's
     fiduciary duties, including its obligations under Sections 252, 253, and
     254(a) of the Israeli Companies Law, 5759-1999 (the "Companies Law").
     In my letter to Taro dated August 13, 2013, I requested a copy of the
     proxy card (the "proxy card") which Taro intended to deliver to its
     shareholders, in order to verify its compliance with Israeli law. Rather
6.   than complying with this request, Taro posted the proxy card on its
     website and began to solicit and collect voting instructions from the
     Company's shareholders using the proxy card (including through the use of
     a soliciting firm).
     After reviewing the proxy card, we believe that it does not comply with
     Israeli law, inter alia, because the Company's Board has used the proxy
     card to implore the shareholders to elect the incumbent members of the
     Board for an additional term of office and to approve handsome
     compensation packages for themselves. In other words, the Board is
7.   recommending that the Company's shareholders support the interested-party
     resolutions which are presented to the shareholders, and it is doing so
     not only in the Proxy Statement but also on the physical card by which
     shareholders are expected to cast their votes. In our opinion, Israeli
     law forbids the endorsement of interested-party transactions in this
     Moreover, contrary to Israeli law, the proxy statement and the proxy card
     provide that any non-vote by a shareholder on any resolution on the
8.   agenda will be deemed to be a vote in favor of the Board's
     recommendation, instead of such non-vote being deemed as
     non-participation in the vote on such resolution.
     Further, it appears that the proxy card designed by Broadridge Financial
     Solutions Inc. for use by the shareholders, as well as the voting form
     used on Broadridge's website for direct voting, do not include the
     required affirmation that each voting shareholder has no personal
9.   interest in resolutions 1, 3, 4, 5, 7a, 7b, 8a, and 8b and is not a
     Controlling Shareholder of Taro, as that term is defined in the Company's
     revised proxy statement dated August 8, 2013. The failure to include
     this affirmation is a breach of the Companies Law as well as applicable
     regulations promulgated thereunder.
     In light of the Board's conduct (including its recommendation to re-elect
     the current External Directors who, in the opinion of a significant
10.  number of minority shareholders, have failed to perform their required
     duties), and without waiving any right available to BlueMountain under
     applicable law, BlueMountain intends to approach the Company's
     shareholders and inform them that BlueMountain will vote:
     a. against the re-election of the current External Directors;
     b. in favor of BlueMountain's nominees; and
     c. against all of the interested-party transactions.
     Additionally, BlueMountain will explain to its fellow minority
     shareholders how they may complete the proxy card if they wish to vote in
     the same manner as BlueMountain, which it hopes and believes a majority
     of the minority shareholders will do.
     BlueMountain stands by its original offer of August 1, 2013 to commence,
     together with other minority shareholders, a dialogue with Taro's Board
11.  regarding BlueMountain's candidates for External Director and the manner
     in which the Company can be managed for the benefit of all of its
     Nothing stated herein waives any right or claim of my client against
12.  Taro's Board of Directors, and all of my clients' rights are hereby
                                                             Oren Shenkar,
Example of a completed voter instruction form:
Letter from BlueMountain's attorney to Taro on August 13, 2013:
Letter from Taro's counsel to BlueMountain on August 20, 2013:

SOURCE BlueMountain Capital Management

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