Sun Pharma and Taro Reach Definitive Merger Agreement

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Sun Pharmaceutical Industries and Taro Pharmaceutical Industries have reached an agreement on a merger in which Sun will purchase Taro's outstanding shares for $43 each, which will total $348 million. Sun already owns a 78.5% stake in Taro, a manufacturer of generic and OTC medications. In a press release, the companies said they expect the definitive merger agreement to close in the first half of 2024.¹

"Over the years, with Sun Pharma's strategic interventions, Taro has remained a key player in the generic dermatology market in a challenging environment,” said Managing Director of Sun Pharma, Dilip Shanghvi, in a press release. “Post completion of the merger, the combined entity will firmly move forward, leveraging its global strengths and capabilities to better serve the needs of patients and healthcare professionals."¹

Taro Pharmaceutical Industries’ most recent revenue report showed $592.89 million in the twelve months ending September 30, 2023, which represents 3.85% growth year-over-year. Taro revenue for the quarter ending September 30, 2023, was $148.20 million, which was a 5.40% drop year-over-year. For the fiscal year ending March 31, 2023, Taro showed annual revenue of $572.95 million, with 2.07% growth.²

Comparatively, for fiscal year 2023, Sun produced a consolidated income of more than 445 billion Indian rupees, which translates to $5.3 billion, compared to more than 395 billion rupees in the previous year.³

"Taro is committed to delivering high quality products to our patients and customers around the world. This merger will further enable us compete effectively in our products and markets,” said Taro CEO Uday Baldota, in the release.¹

The $43.00 per share purchase price is a 48% premium over Taro’s closing price of $28.97 per share on May 25, 2023, which was the last trading day prior to Sun’s submission of its non-binding proposal to Taro. The price represents a premium of 58% to the volume-weighted average price of the shares during the 60 days before and including May 25, 2023, according to Sun. The purchase price is a 13% increase over the purchase price that was initially proposed on May 26, 2023, of $38.00 per share.¹

The merger is subject to closing conditions that include shareholder approval by an affirmative vote representing at least 75% of the voting power of the company’s shares. Sun Pharma agreed to vote in favor of the merger and stated it will not sell its shares to a third party or support any alternative transaction to the merger.

After the merger is completed, Taro will become a privately held company and its shares will no longer be listed on the New York Stock Exchange.

References

1. Taro Announces Merger Agreement with Sun Pharma. Sun Pharmaceutical Industries. News release. January 18, 2024. Accessed January 18, 2024. https://www.prnewswire.com/news-releases/taro-announces-merger-agreement-with-sun-pharma-302037499.html

2. Taro Pharmaceutical Industries Ltd. (TARO). Stock Analysis. Webpage. Updated January 18, 2024. Accessed January 18, 2024. https://stockanalysis.com/stocks/taro/revenue/

3. Income of Sun Pharmaceutical Industries Limited from financial year 2010 to 2023. Statista. October 18, 2023. Accessed January 18, 2024. https://www.statista.com/statistics/990390/india-sun-pharma-revenue/