-- First, why is the value of Taro Ireland in the proposed sale agreement
less than the real estate value of the facilities? In our view, the
agreement in principle with this particular buyer significantly
undervalues the entire facility -- even if one were to take into
account only the existing asset base and ignore any future growth
potential. If one were to add the potential revenue and profit from
sales of products across Europe, the attractiveness of the entire Irish
facility and operations increases multifold.
-- Second, we understand that the proposed consideration for Taro Ireland
includes earn-out payments based on future profits of the operations
over a long period of time. While we anticipate strong future growth
potential, such earn-out payments are contingent on the performance of
the third party buyer and, if payable, are only received at some future
time by Taro. To date, Taro has neither been able to reconcile the
valuation nor provide evidence that this is the best offer available.
-- Third, Taro has provided no evidence of a transparent sale process.
Given the undervaluation mentioned above, and the fact that the
identified buyer is personally close to senior Taro officials, we have
doubts as to the arm's length nature of this transaction. This close
relationship between Taro's management and the proposed buyer is
especially troubling, given Taro's repeated refusal to consider Sun as
a potential buyer of the Irish facility on the grounds that we were a
"related party" and the difficulties that Taro's management claimed
were inherent in such a transaction with a related party.
Sun vigorously disputes the termination of the Merger Agreement by Taro
and will not stand by idly if Taro pursues
|SOURCE Sun Pharmaceutical Industries Ltd.|
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