Sun Pharmaceutical Industries has commenced a tender offer for all outstanding ordinary shares of Taro Pharmaceutical Industries Ltd for US$ 7.75 per share in cash through its subsidiary Alkaloida Chemical Company Exclusive Group Ltd (Alkaloida). On June 25, 2008, Alkaloida exercised its option under its Option Agreement to acquire all the shares held by the controlling shareholders of Taro.

The tender offer is scheduled to expire on July 28, 2008, unless the tender offer is extended. The tender offer is not conditioned on the availability of financing or the approval of the board of directors of Taro.

The complete terms and conditions were set out in the Offer to Purchase, which was filed with the US Securities and Exchange Commission (SEC). Taro shareholders may obtain copies of all the offering documents, including the Offer to Purchase, free of charge at the SEC's website or by directing a request to MacKenzie Partners, Inc., the information agent for the offer. Greenhill & Co., LLC is acting as the Dealer Manager for the tender offer.

On May 18, 2007, Taro and Sun Pharma's subsidiaries entered into a merger agreement whereby Sun Pharma's subsidiary would acquire Taro which the Taro board of directors unanimously approved. At that time, Taro was in a dire financial crisis and Sun Pharma agreed to invest nearly US$ 60 million in cash to save Taro from bankruptcy.

Taro purported to terminate the merger agreement on May 28, 2008. Pursuant to the option agreement, Sun Pharma is exercising its options within 30 days after termination of the merger agreement. Although Sun Pharma believes that Taro's purported termination of the merger agreement was improper, it has exercised the options to preserve its rights under the option agreement and states that the exercise of the options shall not in any way be construed to be an acceptance or recognition of the purported termination of the merger agreement.

Sun Pharma has filed an action in the Supreme Court of the State of New York against Taro and its full board of directors. The action asserting fraud claims against Taro and its directors asks the Court to order the controlling shareholders to honour their promises under the option agreement. In addition, Sun Pharma asks for an order declaring that the merger agreement was not properly terminated.