Guggenheim Offered $215 Million for Sun’s Stake in Taro Pharma

The logo of Sun Pharmaceutical Industries
A plaque displaying the logo of Sun Pharmaceutical Industries, is displayed outside the company's office in Mumbai. Photographer: Abhijit Bhatlekar/Bloomberg

Guggenheim Partners offered to buy Sun Pharmaceutical Industries Ltd.’s stake in Taro Pharmaceuticals Industries Ltd. on behalf of clients for about $215 million.

Guggenheim, which has been advising Taro, offered $15 a share in a May 27 letter and Sun rejected the approach, Taro said in a regulatory filing today.

Sun, India’s largest drugmaker by market value, and Taro have clashed since 2007, when the Yakum, Israel-based company agreed to be acquired by Sun for $230 million, or about $7.75 a share. The takeover faced Taro shareholder opposition and a legal dispute and hasn’t been completed. Taro shares dropped 0.8 percent to $13.99 in over-the-counter trading yesterday.

Guggenheim Chairman Alan Schwartz said in the letter that the firm is “highly confident” it can arrange the purchase of the stock by institutional investors. Schwartz is the former chief executive officer of Bear Stearns Cos. and became chairman of the investment-banking firm last year.

Mumbai-based Sun said in a January regulatory filing that it held about 14.4 million shares of Taro. That’s about 36 percent of all outstanding shares. Selling at $15 a share would give Sun a profit of more than $140 million, more than double the size of its initial investment, Schwartz wrote in his letter, which was included in the filing.

“Our goal is to acquire control of Taro, as we are entitled to under the agreements we signed,” Sailesh Desai, a Sun board member, wrote in a reply to Schwartz that also was included in Taro’s filing. “Therefore, we have to regret your offer.”

A spokesman for Taro declined to comment. Uday Baldota, a spokesman for Sun, declined to comment beyond Desai’s letter. Sun said May 24 it awaits judgment from the Supreme Court of Israel on litigation relating to the Taro transaction.

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