Taro Pharmaceutical shareholder Krensavage states opposition to takeover bid

Taro Pharmaceutical shareholder Krensavage Asset Management sent a message to a special committee evaluating Sun Pharmaceutical Industries Ltd.’s bid for Taro Pharmaceutical. The message states, among other things: “As the largest minority shareholder1 of Taro Pharmaceutical Industries, Krensavage Asset Management remains opposed to Sun Pharmaceutical Industries Ltd.’s inadequate bid to take Taro private…Sun on May 26 disclosed a $38 lowball bid for Taro. Sun’s new offer amounts to a 9% discount to the value of Taro’s tangible assets, primarily $35 a share of net cash. Including real estate and other hard assets, Taro’s liquidation value likely approaches $47 a share. Sun is valuing Taro at $310M, net of cash, for a business that generated $2.4B of cash in the 10 years ended March 31, the close of Taro’s most-recent fiscal year. We question if the special committee Taro appointed to consider Sun’s bid is neglecting its responsibility by embracing a transaction that fails to recognize Taro’s carcass value, much less its ability to generate cash. None of Taro’s board members own shares of the company…Taro’s bankers have lowballed before…Sun can pay more. Sun is offering, net of Taro’s cash, $67M for the roughly 8.1 million Taro shares it doesn’t own. In December 2019, Taro paid $91 a share to repurchase its stock in a tender offer – more than twice Sun’s current bid. Sun requires approval of the majority of Taro’s minority shareholders. Unless Sun acknowledges Taro’s value, we continue to decline to support the transaction”.