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Sun Pharma requests Taro shareholders to reject present management
Our Bureau, Mumbai | Monday, December 21, 2009, 08:00 Hrs  [IST]

Sun Pharmaceutical Industries, the fourth largest Indian pharma company which is fighting for acquiring Israel's Taro Pharmaceutical Industries since May 2007, has appealed to Taro's shareholders to vote against the election and re-election of the proposed directors and against the indemnification proposal during the Annual General Meeting of shareholder to be held on December 31, 2009. Earlier, Dr Barrie Levitt, chairman of Taro has forwarded his letter to shareholders for support and painted a grim picture of Sun's performance viz-a-viz shareholder returns.

Dilip Shanghvi, chairman and managing director Sun Pharma, said in his letter, “In our view, the sole purpose of Dr Levitt's letters is mainly to take your attention away from the 'all encompassing' protection being proposed to be given to 'independent director' as part of a payback for their complicity in illegally perpetuating control by the Levitt/Moros family over Taro in violation of contracts signed by the family.”

The present management of Taro never offered its shareholders a chance regarding the merger plan of Sun Pharma. They were never given the opportunity to vote. To accept or reject requires a vote and Taro's Board gave one excuse after another to indefinitely delay holding the shareholders meeting required to vote on the merger.

The letter from Sun pointed out that six years ago, Taro was 1.5 times more valuable than Sun. Today, Sun Pharma is 17 times more valuable than Taro. In these past 6 years, Taro's share price has decreased 86 per cent, resulting in the loss of $1.6 billion of shareholder value. By way of contrast, over that same time, Sun's share price increased by 406 per cent, leading to a $5.1 billion increase in value for Sun. While ordinary shareholders of Taro have never received a dividend in Taro's long history, over the year, members of the Levitt/Moros family have been paid many million of dollars in salary and bonuses for a performance that brought Taro to the brink of bankruptcy.

The current Board of Taro has missed its own deadlines time after time, and year after year. The company has not produced audited financial statements for fiscal years 2006, 2007 and 2008 and stated that the financial statements for the year 2003, 2004 and 2005 can no longer be relied upon. The present management is not working in the interests of all shareholders and its independent directors are helping Levitt/Moros family in trying to renege on its contractual obligations.

The Sun's letter to Taro's shareholders stated that Dr Levitt has irresponsibly spread lies about Sun's majority owned subsidiary, Caraco Pharmaceutical Laboratories. Caroco's market capitalization was over $230 million as at the end of December 11, 2009 and representing a CAGR of 27 per cent since Sun acquired control.

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