Raging Cap opposes Sun Pharma's offer, calls it inadequate

Sun Pharma's plans to acquire 100% in its Israeli subsidiary Taro Pharma has hit another roadblock. A second shareholder raging capital management opposed Sun's offer of USD 24.5 per share, terming it grossly inadequate, reports CNBC-TV18, Archana Shukla.

It's a second opposition coming to the offer price that Sun has made to acquire the outstanding 32% stake in Taro Pharma at USD 24.5 a share. Raging Capital, another significant shareholder in Taro says it is a grossly inadequate amount to be paid to shareholders and it does not give a full and fair value to the shareholders for what Taro has given to Sun Pharma. In a letter written to Taro board Raging Capital has said that Taro has been given at least 30.9% to the total EBITDA of Sun Pharma and the offer price that Sun Pharma is offering at USD 24.5 a share represents just 10.1% of the total EBITDA that Taro has been offering. Hence, according to the calculations that they have done, USD 71.6 per share could be the fair value for Taro shares that they want Sun Pharma to offer. They have also urged Taro board to set up a special committee, which would have members independent of Sun Pharma to evaluate the entire acquisition proposal and to also evaluate what best can be done for the minority shareholders. Sun Pharma had given an offer at USD 24.5 a share and would be at that price paying out USD 368 million to acquire the additional 15 million shares in Taro Pharmaceuticals, so that they acquire the entire 100% and privatize the company. This could be important for Sun because they want to consolidate their position in the US market. Analysts feels Sun would be in a position to negotiate because they have over USD 1 billion cash in their books.