Templeton Asset Management Rejects Sun Pharmaceutical's Tender Offer for Taro Pharmaceutical

Templeton Asset Management Ltd. ("Templeton Emerging Markets Team") today rejected Sun Pharmaceutical's ("Sun") tender offer for Taro Pharmaceutical ("Taro") shares. Mark Mobius, executive chairman of Templeton Asset Management, said, "The offer is not acceptable to us as we strongly believe that it undervalues Taro Pharmaceutical."

Mobius pointed out that in the view of the Templeton Emerging Markets Team, Sun's offer does not reflect current value, since the terms of the offer were communicated and determined over 12 months ago. "In the meantime, Taro reported a strong operational turnaround and a sharp improvement of its earnings, as well as its balance sheet situation, which now continue to show momentum well into 2008." He pointed out that in Taro's statement of June 19, 2008, the company said that there had been a "dramatic financial turnaround" with net income of approximately USD 21.1 million in 2007. Taro had also underlined the high value of its new product pipeline. Mobius also said that in reaching this conclusion the Templeton Emerging Markets Team reviewed the recent fairness opinion of Merrill Lynch (May 28, 2008) which described the offer as "financially inadequate, from a financial point of view."

Mobius commented, "As we have expressed on multiple occasions, we believe USD7.75 substantially undervalues the shares."

Mobius went on to indicate that in making its decision, the Templeton Emerging Markets Team also reviewed the analyses and recommendation of independent advisory services. He noted that both Glass Lewis and RiskMetrics Group recommended shareholders to reject the merger agreement over 12 months ago. Glass Lewis stated that "... we believe that investors are left unable to determine whether the transaction is financially fair...we cannot in good faith support a transaction that is not accompanied by current financials and/or a detailed fairness opinion." RiskMetrics Group expressed other concerns and concluded that "... we recommend shareholders to vote against the merger....it is imperative that the major shareholders be allowed an opportunity to negotiate a deal that will maximize value for all shareholders." Mobius said, "Since the terms of the tender offer are the same as those of the merger reported on by those firms, we believed that the analyses were relevant to our decision."

Mobius added, "In making our decision, we considered the recent shareholder dispute between Taro and Sun. That suit also suggests that Sun appears to have had access to some non-public information regarding the Irish operations which puts us, as ordinary shareholders, in an unequal and disadvantaged position. We are very concerned about the rather obscure nature of the dispute with regard to the Irish operating unit."

"We strongly support the Taro Board's plan to re-list Taro shares on NASDAQ and to release the fully audited financial reports for the past years to finally grant all shareholders their right of reviewing the company's results," said Mobius. "Only then can we have the information necessary to make a decision and obtain a fair price for our shares. We expect further upside revision as a result of much improved liquidity of the shares, as well as better transparency of the company."

Templeton Asset Management Ltd. is a wholly owned subsidiary of Franklin Resources, Inc. , a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Mutual Series, Fiduciary Trust, Darby and Bissett investment teams. The San Mateo, CA-based company has more than 60 years of investment experience and over $580 billion in assets under management as of June 30, 2008.
Source: drugs.com