Sun and Taro reach an agreement on  $348M buyout after 17 years

Sun Pharmaceutical and Taro Pharmaceutical have formally announced their merger after a 17-year courtship. Sun Pharmaceutical, headquartered in Mumbai, is poised to acquire the outstanding shares of Israeli drugmaker Taro at $43 per share, translating to a comprehensive transaction value of $348 million. The deal is projected to be completed within the current year’s initial half.

In its most recent financial disclosure, Taro reported a revenue of $593 million for the 12 months ending on September 30, 2023, signifying a modest 4% year-over-year increase. It is noteworthy that Taro’s annual revenue has experienced a downward trend since peaking at $951 million in 2016. In contrast, Sun disclosed a revenue of 445 rupees ($5.3 billion) in the preceding fiscal year.

Dilip Shanghvi, the Managing Director of Sun, recognized Sun Pharma’s strategic contributions to Taro’s sustained presence in the challenging generic dermatology market. This announcement marks the culmination of Sun’s persistent efforts to acquire Taro, commencing in 2007 with an unsuccessful bid of $454 million. In 2012, Sun successfully acquired a 77% stake in Taro at $39.50 per share, aiming to transition it into a privately held subsidiary. However, Taro shareholders rebuffed a subsequent $685 million takeover offer.

In May of the previous year, Sun proposed an offer to acquire Taro’s outstanding shares at $38 each, totaling $307 million. Subsequently, Sun revised its offer to $43 per share in the ensuing month, ultimately securing acceptance from Taro.

Uday Baldota, the CEO of Taro, expressed the company’s commitment to delivering high-quality products globally, emphasizing that the merger would enhance its competitiveness across various products and markets.

Previously successful with dermatology and pediatric products, particularly in the U.S. and Canada, Taro became entangled in a U.S. Department of Justice price-fixing investigation alongside other generic drug manufacturers. In 2020, Taro opted to pay $419 million to act as a witness, avoiding prosecution on two criminal conspiracy charges. Sun, also implicated in the same case, settled its portion in March of the subsequent year by paying $75 million.

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