Krensavage Asset Management Opposes Sun Pharma Buyout Bid For Taro

Krensavage Asset Management LLC has opposed Sun Pharmaceutical Industries Ltd.'s bid to acquire the remaining shares of Taro Pharmaceutical Industries Ltd., citing a "paltry" offer.

"Not only is Sun failing to offer a control premium, but it also seemingly ignores Taro's 22 generic drugs awaiting clearance in the U.S., including four with tentative approvals," the investment management firm said in a statement on Wednesday.

In May, Sun Pharma, which already owns a 78.5% stake in Taro, put forth an offer to acquire the remaining 21.5%, or roughly 81 lakh shares, owned by the general public for $38 per share.

Krensavage said Sun Pharma's inadequate offer amounted to a 17% discount to the value of Taro's tangible assets—$36 a share of net cash. If Taro was liquidated, shareholders could receive more than $45 a share, it said.

"With a market value of $31 billion, Sun can pay more," Krensavage said. "Sun is offering, net of Taro's cash, $16 million for the roughly 8.1 million Taro shares it doesn't own."

"In October 2011, it lowballed Taro's shareholders with a $24.50-a-share bid," Krensavage said, highlighting that the current tactics sound familiar. "Ten months later, Sun raised its offer more than 60% to $39.50 after a special committee of Taro directors rejected the bid."