Mumbai, Jan. 5: Sun Pharmaceutical Industries has offered to pay a premium for the shares of Taro Pharmaceuticals of Israel to break the logjam on an acquisition deal that went sour last year.

Sun Pharma has two options for Taro. Under the first option, it has offered to raise its offer to $9.50 a share from its earlier offer of $7.75, provided Taro withdraws its termination of the merger agreement. Under the second option, it has offered to pay $9 per share to all non-Levitt shareholders. Levitt is one of Taro’s controlling shareholders.

The two options were presented by Sun Pharma CMD Dilip Shanghvi to the Taro board. A copy of the new offer was sent to the stock exchanges today. These proposals were placed after the Supreme Court of Israel recommended on December 8 that the parties negotiate so that they could reach a settlement to resolve the dispute.

In May last year, Taro had terminated a merger agreement between the two. Sun Pharma had earlier agreed to acquire Taro in an all-cash deal worth $455 million. According to the agreement, Sun Pharma was to acquire the company for $7.75 per share.

Later in June, Sun Pharma had announced that it has commenced a tender offer to buy out all the outstanding shares of Taro. However, subsequently certain non-promoter directors of Taro approached the Israeli court and argued that Sun Pharma must make a special tender offer. According to this rule, Sun Pharma would have needed the support of at least 5 per cent of the non-promoter holders.

Shanghvi said in accordance with the suggestion of the Supreme Court, Sun’s Israeli legal counsel initiated discussions.

However, they did not receive any substantive response. Under the first option, the Levitts and the Moros will also deliver their shares to an independent escrow agent. The escrow agent will then release these shares to Sun Pharma.