Mumbai, India (May 21)—Sun Pharmaceutical Industries (www.sunpharma.com) and its subsidiaries signed definitive agreements to acquire Taro Pharmaceutical Industries (Haifa Bay, Israel, www.taro.com), a generics manufacturer with subsidiaries and manufacturing operations in the United States, Canada, and Israel.

Sun will fund the $454-million acquisition with internal accruals and proceeds from its $350-million foreign-currency convertible bond. The transaction values Taro’s equity at $230 million, or $7.75 per share. The value is a 27% premium above Taro’s May 18, 2007 closing price of $6.10 per share. Sun Pharma will refinance $224 million of Taro’s net debt and grant Taro immediate liquidity by providing the company with $45 million in interim financing.

Taro specializes in dermatological and topical products such as the “Ovide” lice treatment. The company also manufactures cardiovascular, neuropsychiatric, and anti-inflammatory therapeutics. Taro’s manufacturing sites produce topical creams and ointments, liquids, capsules, and tablets. Sun believes Taro’s production capabilities will complement its manufacturing and development structure in the US. In addition, Taro manufactures active pharmaceutical ingredients (APIs), including  steroids.

Sun is a specialty pharmaceutical company that manufactures branded generics. The company has product-development and process-chemistry capabilities and manufactures APIs and dosage forms.

The all-cash deal is subject to the approval of Taro’s shareholders and the relevant regulatory authorities.