NEW YORK, Aug. 7, 2013 /PRNewswire/ -- IsZo Capital Management LP, one of the largest minority shareholders of Taro Pharmaceutical Industries Ltd. (NYSE: TARO), announced today that it delivered the following letter to the Board of Directors of Taro urging the Board to withdraw its recommendation with respect to the re-election of the current Taro External Directors whose terms will expire at the end of this year and instead support the two highly qualified independent nominees proposed by BlueMountain Capital Management, LLC for election at the 2013 Annual Shareholder Meeting to serve for a 3-year term.
Re: Election of External Directors at Taro's 2013 Annual Shareholder Meeting
Dear Members of the Board:
IsZo Capital Management LP ("IsZo Capital") is one of the largest minority shareholders of Taro Pharmaceutical Industries Ltd. ("Taro"), with ownership of over 2% of Taro's outstanding shares.As you know, we believe strongly in Taro's potential to continue generating significant value for all shareholders and have written to you on prior occasions to identify means of further enhancing that value and preserving this opportunity for all shareholders. We believe that the upcoming 2013 Annual Meeting of Shareholders of Taro (the "2013 Meeting"), at which two External Directors will be elected to serve on the Board for the next 3 years, presents to both the Board of Directors of Taro and Taro's shareholders the opportunity to infuse the Board with the renewed energy, business acumen and independent judgment of two highly qualified External Director candidates (the "Independent Nominees") recently nominated by BlueMountain Capital Management, LLC ("BlueMountain").
We understand that before the Board became aware of the Independent Nominees, Taro filed its notice of annual meeting and proxy statement with respect to the 2013 Meeting (collectively, the "2013 Proxy Statement") and recommended that Taro's shareholders vote for the re-election of the current External Directors whose terms are expiring at the end of this year (the "Incumbents"). Our hope is that, after considering the input of all Taro shareholders, including IsZo Capital and BlueMountain, the Board will withdraw its support of the Incumbents and instead will recommend to Taro's shareholders the election of the Independent Nominees at the 2013 Meeting. In our view, it would be a significant disservice to Taro minority shareholders for the Board to continue to support the Incumbents for the following reasons:
A. The Incumbents lost the confidence of Taro minority shareholders when the Incumbents, as part of the Special Committee of the Board appointed to evaluate the offers of Sun Pharmaceutical Industries Ltd. ("Sun") to acquire Taro, took no less than 9 months to reject the grossly inadequate $24.50 per share 2011 offer and no more than 2 days to negotiate and approve the undervalued $39.50 per share 2012 going-private transaction crafted by Sun to squeeze out Taro minority shareholders at a price below the then prevailing market price for Taro's shares. We do not believe that the Incumbents should be rewarded with re-election for another 3-year term after they have proven their lack of independence.
B. As it stands today, the Board is constituted of a majority of directors that have significant current or prior ties to Sun. Given that Taro's minority shareholders have no confidence in the Incumbents' ability to act independently and fairly, re-electing them for a new 3-year term would solely serve Sun's interests. We remind the Board that its fiduciary duties are owed to all shareholders of Taro. Accordingly, IsZo Capital urges the Board to avail itself of this special opportunity to demonstrate its independence from Sun by supporting the candidacy of the Independent Nominees.
In any case, in the interest of fair and open External Director elections at the 2013 Meeting, and in observance of the Israeli Companies Law, we would expect the Board and Taro's management to:
1. Promptly implement any steps required to enable Taro's shareholders to vote for the election of the Independent Nominees as External Directors of Taro at the 2013 Meeting by amending the 2013 Proxy Statement accordingly. Given that Taro has moved the date of the 2013 Meeting to early September, notwithstanding that the annual meetings of shareholders have been historically held in December, and that the 2013 Proxy Materials were just made available to Taro's shareholders in late July, we also expect that the 2013 Meeting will be rescheduled to such later date as would allow Taro's shareholders sufficient time to examine the amended 2013 Proxy Statement and consider the candidacy of the Independent Nominees.
2. Ensure appropriate steps are taken to safeguard the integrity of the majority of the minority voting standard, which is required to be satisfied as a condition to the re-election of the Incumbents, including by retaining an independent inspector of election of international reputation for purposes of tabulating the votes cast at the 2013 Meeting and confirming that only the votes of minority shareholders were counted when ascertaining whether the majority of the minority voting standard was satisfied with respect to the election of the External Directors.
3. Make available, promptly following the 2013 Meeting upon reasonable request, to IsZo Capital and any other Taro shareholders entitled to make such request, the information necessary to validate that the integrity of the majority of the minority voting standard was upheld with respect to the election of the External Directors.
We wish to emphasize that IsZo Capital has no agreements or relationships with either of the Independent Nominees and is expressing its support for the Independent Nominees solely based upon its belief that the Incumbents have failed to represent the interests of all Taro shareholders.
For the reasons stated above, IsZo Capital intends to vote "AGAINST" the Incumbents and "FOR" the Independent Nominees and would urge its fellow Taro minority shareholder to do the same.
/s/ Brian Sheehy
Managing Partner, IsZo Capital
SOURCE IsZo Capital Management LP