Sun Pharmaceutical Industries Ltd (Sun) has strongly criticized the decision of Taro Pharmaceutical Industries' (Taro), an Israeli generic drug company, to sell its Irish subsidiary company. In this regard Dilip Sanghvi, chairman and managing director of Sun, sent a letter to Barrie Levitt, chairman of Taro and suggested that the Irish facility has the potential to produce substantial revenues for Taro in the future and any sale now is premature. This Irish facility is of strategic importance to Taro. Sun repeatedly refused to consent under the merger agreement to the sale of those operations and now it is planning to publish an advertisement, in the Irish press notifying any potential buyers of Taro Ireland or its assets of Sun's intentions. Currently, Sun is holding stake of 34.4 per cent in Taro.

In the press release, Taro makes a point of mentioning the monthly costs of operations in Ireland and that while the company reached an agreement in principle after the date of the merger agreement to sell Taro Pharmaceuticals Ireland Ltd (Taro Ireland), an Irish subsidiary of Taro that owns and operates the multipurpose pharmaceutical manufacturing and research facility in Roscrea, Ireland, to a group of Irish investors,

Sun has pointed out that it had several reasons for withholding its consent to the sale of the Irish operations such as, concerns regarding the sale process and the fact that the agreement in process Taro reached with the Irish buyers significantly undervalued the Irish operations, the Irish operations presented Sun with considerable strategic and synergistic value as part of its merger with Taro; and the facility has the potential to produce substantial revenues for Taro in the future. Given the number of injectable products which have been approved, or are in process for approval, by the Irish authorities, and the access this provides to Europe is importance to Taro.

Sanghvi pointed out in his letter that to date Taro's Irish operations have been loss making since the time the Roscrea facility was acquired in March 2003. While Taro's Form 20-F filed in March 2007 listed several measures being pursued by management for liquidity improvement, the Irish operations were not cited as a drain on Taro's liquidity, nor was the sale of the Irish facility listed as a remedial option. In fact, at no point in tune during the financial crisis that precipitated the entry of the merger agreement, did Taro identify the disposal of the Irish facility as a measure to ease liquidity despite the monthly operating costs related to those operations. Nothing prevented you from pursuing this operation prior to May 2007 during Taro's most dire liquidity period.

Sun vigorously disputed the termination of the merger agreement by Taro and will not stand by idly if Taro pursues actions contrary to the spirit of the merger agreement that strip the company of assets of strategic importance to the company's future operations and that Sun would otherwise have had the opportunity to preserve and subsequently develop had the merger agreement not been wrongfully terminated.

In a letter to Taro's chairman, Sun said, "Sun, as Taro's potential owner, will scrutinize the transaction process and the terms of any such proposed transaction and will hold directors of Taro liable for any breach of judiciary or other duties that may arise from such a transaction. These and other facts and omissions by Taro (and its founding shareholders) give rise to substantial claims that Sun intends to pursue, all of which are expressly reserved."