Advantage sun ; Sun pharma's hostile bid to take over Israeli drug major Taro Pharma received a fillip last fortnight. An Israeli court ruled in favour of Sun and against the motion of Taro to conduct a special tender offer.

Sun pharma's hostile bid to take over Israeli drug major TaroPharma received a fillip last fortnight. An Israeli court ruled infavour of Sun and against the motion of Taro to conduct a specialtender offer. Taro's directors had filed a suit in June this year,requesting a Tel Aviv court to force Sun to comply with specialtender offer rules. Such regulation is meant to protect minorityshareholders' interests under Israeli law.

Basically, this case is a big win for Sun. It proves that we havedone everything that was to be done and Taro was not doing what wasin the best interest of its shareholders, says a Sun Pharmaspokesperson commenting on the ruling.

It may be recalled Sun and Taro had signed a merger agreementlast May, which Taro withdrew from almost a year later. Since then,the two companies have been crossing swords in courts in Israel andthe US. Taro had pulled out of the merger agreement citing thatSun's offer price was too low considering Taro's improved financialperformance in calendar year 2007.

Sun had contested the claim saying that the performance would nothave been possible but for Sun's cash injections into Taro. Sun alsoheld the Taro board could not unilaterally terminate the agreementas per their original agreement and that its proposed revised offerof $10.25 per share was a fair price.

Market watchers believe the latest judgment is a positive forSun, although it might be too early to start dancing in the aisles. It's definitely a positive move for Sun Pharma but to say that Sunis closer to acquiring Taro is a bit too early. Taro can stillappeal with the Supreme Court of Israel, says Sarabjit Kour Nangra,VP, Research at Mumbaibased Angel Broking. However, the verdictmight help as a base for any further litigation, she adds. Butthat's just one front that Dilip Shanghvi, founder of Sun Pharma, isfighting Taro on. As a Morgan Stanley research report says: Separately, Sun continues to litigate with Taro promoters in NewYork courts, primarily on two counts.

One, the enforcement of the option agreement; and two, achallenge to Taro's purported termination of the merger agreement.The elimination of the special tender offer holds the key to theTaro acquisition, and now Taro promoters have limited defenseoptions left, we believe. Clearly, it's advantage Sun. T.V.Mahalingam