News Feature | March 28, 2014

Internal Turmoil For Sun Pharma

By Marcus Johnson

Sun Pharmaceutical Industries is facing internal strife. The Indian based company is seeing opposition from minority shareholders in its bid to re-elect two of its nominees as independent directors to Taro Pharmaceutical. Taro Pharmaceutical is a subsidiary of Sun Pharma based in Israel. Taro Pharmaceutical is voting on the re-election and various other issues at the company's general meeting in Israel this week.

One prominent minority shareholder, BlueMountain Capital Management, is urging other shareholders in Taro to vote against existing directors in Taro in the company meeting. BlueMountain Capital and IsZo Capital LP filed a lawsuit against Taro Pharmaceutical in Israeli court this past fall. The two companies are the largest minority shareholders in Taro.

The goal of the lawsuit was to vacate resolutions which had been voted upon earlier in September. BlueMountain claims that those same resolutions are being “presented for ratification” at this week's company meeting. BlueMountain claims that there were “flaws” in the voting process that led to particular outcomes. Now, independent proxy voting advisory firms such as Institutional Shareholder Services and Glass Lewis & Co. are recommending that other Taro shareholders vote for BlueMountain's nominees.

Sun Pharma has seen consistent opposition from minority shareholders since their acquisition of Taro in 2007. Minority shareholders have fought off efforts from Sun Pharma to purchase remaining shares in Taro that would have transferred significant voting power from minority shareholders to Sun Pharma. In February 2013, Sun Pharma attempted to buy the remaining equity of Taro for $39.50 per share.

BlueMountain's spokesman released a statement on the matter stating, “That offer, when compared to the current price of around $120 a share, would have unambiguously transferred significant value from Taro’s minority shareholders to its controlling shareholder Sun.”

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