Troubled Taro needs to find buyer, analysts say

Leading candidates to buy Taro were Perrigo and Mylan Pharmaceuticals Inc., while Novartis or Merck could also show interest.

By SHARON WROBEL
August 23, 2006 08:29
2 minute read.
taro pharmaceuticals logo 88

taro pharmaceuticals log. (photo credit: )

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later

Debt-ridden Taro Pharmaceutical Industries Ltd. needs to put itself up on the block if it wants to save itself, those who follow the generic drugmaker said Tuesday. "Looking at the state of the company's balance sheet from more than two years ago and its debt covenants of about $200 million, Taro has little or no choice but find a buyer to gain some value," said Ori Hershkovits, an analyst at Leader & Co. "If the company goes on for much longer without finding a buyer or some other option, it is poised to go bankrupt." The Nasdaq-listed company with a market capitalization of around $392m., was founded by Israeli pharmacists and American physicians and has made pharmaceuticals since 1950 with operations in the US, Israel, Canada, Ireland and the UK. "Similar companies to Taro have been sold at three to five times their annual sales," said Hershkovits, estimating that "with approximately $300m. in sales, Taro could be sold for anywhere between $600m. and $1 billion" if $200m. in debt and about $100m. in litigation costs for delaying filing of their accounts are subtracted out of the purchase price. Leading candidates to buy Taro, according to Hershkovits, were Perrigo and Mylan Pharmaceuticals Inc., while Novartis or Merck could also show interest. Teva Pharmaceutical Industries Ltd., the world's largest generic company, was not seen as a likely buyer. "I don't think Teva will be interested or have her focus on a company like Taro," said Yisca Erez, an analyst at Clal Finance Batucha. "Taro does not suit Teva's pipeline." Last month, the Taro said it might be delisted from the Nasdaq because it hadn't filed its 2005 annual report. It expected to complete the audit of its 2005 financial statements this month August and make the necessary filings. In June, the company said it would need to restate 2003 and 2004 results because its estimates for accounts receivables did not include information from customers that it only recently received. "Something has been cooking there for months, which put the company on the block," said Hershkovits. "The company had been delaying filing its accounts since May or June. It is clear that Taro is in a very tight spot without the ability to reinvest." The last full audit of the company's accounts was carried out in December 2004. The company's share price had fallen from around $30 in June 2005 to under $10 in June this year. Following press reports this week that Taro was looking for a buyer and has hired an investment bank, shares jumped as high as $13.75 on Tuesday. Taro's general manager Samuel Rubinstein declined to comment on the rumors that the company was in the process of seeking a buyer. At the beginning of this month Franklin Resources Inc, the global investment management company, raised his stake in Taro from 10.8% to 16.8%.

Join Jerusalem Post Premium Plus now for just $5 and upgrade your experience with an ads-free website and exclusive content. Click here>>

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection

By GLOBES, NIV ELIS