Taro said Thursday, July 19, that the special committee of its board of directors has unanimously rejected Sun's unsolicited offer to buy the stock at $24.50 per share, claiming that the bid is inadequate and not in the best interests of its minority shareholders. Sun Pharma, of Mumbai, owns the remaining 66.3% of Taro.

Sun's bid represented a 26% premium to Taro's $19.45 per share value the day before the bid was revealed Oct. 18, 2011, but that was considered woefully inadequate by a number of Taro's minority shareholders, many of whom railed against the proposed transaction and demanded the company take steps to ensure an independent valuation. Two months after Sun made its bid, Taro's special committee hired Citigroup Global Markets Inc. as its financial adviser and law firms Goldfarb Seligman & Co. and Willkie Farr & Gallagher LLP as its legal counsel in Israel and the U.S., respectively.

Taro's stock blew past the $24.50 per share bid on Nov. 2, 2011, and has since traded at a minimum of roughly $30 per share in 2012. The stock spiked roughly 5% Thursday, moving from a $36.31 per share Wednesday close to $37.50 per share during midday trading.

The bid rejection is the latest in a multiyear tug of war between Taro and Sun. The two first entered into a merger agreement in May 2007 at $7.75 per share and later revised that bid to $10.25 per share before Taro rejected the offer. Sun later won voting control of Taro via a legal decision handed down by the Israeli supreme court in September 2010.

Minority shareholders were concerned Sun would attempt to complete its takeover by squeezing out shareholders on the cheap, and several of them, including Grand Slam Asset Management LLC, Raging Capital Management LLC, Permian Investment Partners and IsZo Capital Management LP, complained of the valuation of Sun's $24.50 per share bid. The offer valued Taro at $1.09 billion.

Taro produces over-the-counter pharmaceuticals and active pharmaceutical ingredients, or APIs. Taro posted $182.7 million in net income on $505.7 million in net sales in 2011, up from $64.1 million in net income on $392.5 million in net sales in 2010.

Sun's largest market is the U.S., where it has a generic presence through subsidiary Caraco Pharmaceutical Labs. Its Indian presence is strongest in therapeutic areas such as psychiatry, neurology and cardiology.

Steven Seidman and Laura Delanoy of Willkie Farr & Gallagher served as Taro's U.S. legal counsel.