Taro Pharmaceutical Industries Ltd (Taro) has rejected Sun Pharmaceutical Industries (Sun) revised merger proposal price of $9.50 per share. Taro pointed out that it was substantially lower than the price Sun paid to acquire an eight per cent minority interest from another shareholder in February 2008, and represented a step backward from the $10.25 merger proposal Sun made last April.

Taro stated that, while Sun has been attempting to portray its offer as an improvement over its original $7.75 bid, which was rejected by Taro's shareholders in July 2007, in fact the new offer constituted an effort to renege on its offer of April 2008, and that Taro's board did not view this as a constructive way to begin a good faith negotiation. Taro said, "If Sun was truly serious about its $9.50 proposal and thought that it had any chance of being accepted by Taro shareholders, it certainly would not have rejected Taro's offer to put it to a shareholder vote."

Taro added, "If Sun is unwilling to sit down with us and Templeton in face-to-face negotiations, then Sun should either engage in mediation, or agree to the shareholder referendum. Sun can choose any one of these three alternatives -- face to face negotiations, a shareholder vote on a merger at any price of Sun's choosing, or mediation under the auspices of the Israeli Supreme Court. Unfortunately, to date Sun has only been willing to make low-ball offers and 'negotiate' through the press."

Taro said that Sun has refused to accept Taro's latest proposal to engage in mediation in an effort to resolve all of the outstanding issues between Taro and Sun. Sun had previously rejected both Taro's suggestion of a meeting of principals, as well as Taro's offer to submit Sun's merger proposal to a vote of Taro's public shareholders.

Taro stated that its proposals for a face to face meeting and for mediation were entirely consistent with the suggestion of the Israeli Supreme Court that all parties to the current dispute -- Taro, Sun and Templeton -- work together to seek to a resolution. Contrary to Sun's public statements, Taro has never refused to negotiate; it was Sun who rejected out-of-hand Taro's proposal for a face-to-face meeting of the parties.

"The fact is that it is Sun, not Taro, that has refused to negotiate. Sun still is unwilling to sit down with Taro in an attempt to resolve this dispute. Now Sun has even refused to accept the concept of mediation," Taro said.

Taro also noted that Sun appeared to be unwilling to include Templeton, Taro's largest public shareholder, in any discussions. "Templeton is a party to the lawsuit pending before the Israeli Supreme Court, and has nearly enough shares to veto a merger all by itself," Taro stated. "Clearly, there cannot be any meaningful chance of resolving this dispute if Sun is unwilling to include Templeton in the negotiations."