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Israeli drug firm Taro Pharmaceuticals has filed a law suit in a US district court against Mumbai-based Sun Pharmaceutical Industries alleging violation of non-disclosure agreement and misleading shareholders.
Taro, which is fighting a hostile take over bid by Sun, said the Indian firm had fully exploited its highly confidential and proprietary business information to launch repeated competitive attacks on sales of Taro products in the US.
"In their effort to take control of Taro, Sun and its affiliates have also misappropriated and misused confidential information of Taro which Sun obtained under a written confidentiality agreement dated February 16, 2007 ...," Taro said in its petition to southern district court of New York.
Both companies are listed on the New York Stock Exchange. Taro has lost and is continuing to lose sales, customers, and business opportunities as a direct result of Sun's conduct, the Israeli firm said.
It also alleged that Sun is seeking to coerce shareholders of Taro to sell their Taro stock to it for a grossly inadequate price by means of a open offer statement, which has been amended over 25 times, and extended as recently as mid-September, which violates US laws.
Taro alleges that the open offer statement made by the Indian firm has violated US laws as it has not disclosed the the information about "a long pattern of serious violation of Food and Drug Administration rules and procedures by Sun's US subsidiary, Caraco Pharmaceutical Laboratories..."
The Israeli firm added that the Sun has also not disclosed the information to its shareholders about the seizure by US Marshals of over 20 million of Caraco's products at the behest of the FDA and subsequent closure of Caraco's major manufacturing and packaging operations in the US.
"The revelation of these matters and Sun's failure to disclose them in its current tender materials are merely the latest step in a pattern of material misstatements and omissions by Sun in the inception and each step of its ongoing program to acquire Taro," it added.
Both Sun and Taro resumed to court battles in Tel Aviv and New York, over the issue of open offer and termination of 454 million merger agreement signed between them in 2007. Last year, Taro had unilaterally terminated the $454 million merger pact with Sun Pharmaceutical citing under valuation. After which Sun Pharma launched an open offer.
Sun Pharma had commenced an open offer on June 30, 2008 at a price of $7.75 per share through its arm Alkodia to acquire all shares of Taro Pharmaceutical. The move was challenged by Taro in the Israeli Supreme Court which has prohibited the Indian firm from closing the offer until it gives a verdict on the issue.