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."
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