BlueMountain Capital Management, LLC Nominates Two Candidates for Election to the Board of Directors of Taro Pharmaceutical Industries LTD to Serve the Upcoming Three Year Term of External Director:

Mr. Ben-Ami Rosenfeld, Former Chief Operating Officer of Teva Pharmaceutical Industries LTD; Ms. Adi Bershadsky, Colonel Israeli Air Force (Ret.)

BlueMountain Encourages All Minority Shareholders to Avail Themselves of Their Voting Rights and Minority Shareholder Protections Under the Israeli Companies Law

News provided by

BlueMountain Capital Management

Aug 01, 2013, 10:59 ET

NEW YORK, Aug. 1, 2013 /PRNewswire/ --

August 1, 2013

Dear Fellow Minority Shareholders:

We wish to inform all minority shareholders that on Thursday, August 1, 2013, our representatives delivered a letter to Taro's Board of Directors at its headquarters in both Haifa and Yakum, in which we notified the Board that we are exercising our right as minority shareholder, holding in excess of 1.0% of the voting shares and 1.5% of the total shares outstanding, to nominate two candidates to the Board of Directors in the role of External Director. Taro has currently scheduled a shareholder vote to re-elect its current External Directors, Mr. Dan Biran and Ms. Ilana Avidov Mor, at its upcoming Annual General Meeting of Shareholders to take place on September 9, 2013. A copy of our letter to the Taro Board of Directors is attached to this press release. A copy of Taro's Notice of Annual General Meeting of Shareholders filed on a Form 6-K with the SEC on July 25, 2013 can be found at:
http://www.sec.gov/Archives/edgar/data/906338/000115752313003591/a50676244.htm.

We believe it is in the best interest of all minority shareholders to support each of our nominees for the office of External Director and to vote against the re-election of the current External Directors. Under the Israeli Companies Law (the "Companies Law"), minority shareholders are granted robust protections in recognition of the fact that there exists a potential conflict of interest between majority and minority shareholders, in which a majority shareholder may take actions that are not in the best interests of all shareholders. We believe that these minority protections played a pivotal role in thwarting the offer by Taro's majority shareholder, Sun Pharmaceutical Industries Ltd. ("Sun"), to acquire the minority shareholder interest in August 2012 for $39.50 per share, below Taro's average closing price over the prior 10 trading days of $40.84 per share and approximately 40% lower than yesterday's closing price of $65.51 per share.

It is our belief that there exists a significant ongoing opportunity to create shareholder value at Taro through, among other best practices, refining of its business strategy, evaluating an optimal capital structure and the use of Taro's growing cash balance, implementing more robust capital markets and shareholder communications, and ensuring that all strategic options are considered on an arm's length basis.

We continue to expend considerable time and resources to explore all avenues available to ensure that value is maximized for all shareholders of Taro. We will continue to do so as necessary. To this end, we have nominated the following individuals, whom we believe bring the requisite industry, operational, strategic and financial experience to execute the duties of External Director in a manner consistent with the letter and spirit of the Companies Law.

Mr. Ben-Ami Rosenfeld is one of Israel's leading experts in the pharmaceutical industry, having served from the 1970's until the mid-1990's in several key positions in the pharmaceutical industry in Israel and abroad as, inter alia, the General Manager of subsidiaries of Schering Plough USA in Europe and Africa, and as the Chief Operating Officer and Executive Vice President of Teva Pharmaceutical Industries Ltd.

Ms. Adi Bershadsky is a retired Colonel of the Israeli Air Force (the first woman ever achieving such rank in the Air Force); served as the IDF's Attaché and Head of the Ministry of Defense Delegation in Poland, the Czech Republic, Slovakia and Hungary; currently serves and has previously served as member of several other boards of directors, including among others: Israel Television News Company Ltd. (Channel 2 News); Israeli Military Industries Ltd. (IMI); and Jobokit Holdings Ltd. (a publicly-traded company on TASE). Ms. Bershadsky also served as Business Development and International Marketing Director at Ness A.T. Ltd. and currently serves in a similar position at mPrest Systems (2003) Ltd. (an affiliate of RAFAEL Advanced Defense Systems Ltd.).

We also wish to inform our fellow minority shareholders of certain aspects of the Companies Law as regards the voting and election process for External Directors. However, given the complexity of the rules, our representation should not necessarily be relied upon and we would refer interested parties to Item 7 of Taro's Notice of Annual General Meeting of Shareholders filed on a Form 6-K with the SEC on July 25, 2013, for more detailed information.

Page 12 of Taro's Notice of Annual General Meeting of Shareholders states:

In order to re-elect, under Items 7a and 7b of this Proxy Statement, Ms. Ilana Avidov Mor and Mr. Dan Biran, respectively, each to a three-year term as an External Director, the required vote, in each case, is a majority of the votes cast at the Meeting, whether in person or by proxy, provided that either:

the majority includes the majority of the total votes of non-controlling shareholders (as defined in the Israeli Companies Law) or shareholders who do not have a personal interest in such election present at the meeting in person or by proxy (abstentions will not be taken into account); or
the total number of votes against the election of the statutory external director by the non-controlling shareholders or shareholders who do not have a personal interest in such election may not exceed two percent of the aggregate voting rights in the company.

In plain English, this means that in order for each candidate to be elected or re-elected as an External Director, it is not enough that he or she receives a majority of the votes in his or her favor, but also requires that the candidate, either (i) receives the support (i.e., the votes) of a majority among the minority shareholders participating in the vote; OR (ii) that the total votes cast against such candidate are less than 2 percent of the total voting rights in the Company.

Thus, if a majority of the minority shareholders who actually vote, and represent more than 2% of the voting rights of the Company, VOTE IN FAVOR of the candidates nominated by BlueMountain (i.e., in favor of Mr. Ben-Ami Rosenfeld and Ms. Adi Bershadsky), AND SIMULTANEOUSLY VOTE AGAINST the re-election of Mr. Dan Biran and Ms. Ilana Avidov Mor, the re-election of the current External Directors who are endorsed by Taro's Board of Directors will be blocked.

We remind fellow minority shareholders that the current External Directors approved the acquisition of Taro by Sun for $39.50 per share, and recommended (together with the other members of the Board) to the minority shareholders to vote in favor of the transaction.

Thankfully, the "majority of the minority shareholders" requirement described above is the same requirement that would have been needed to approve the said acquisition of Taro by Sun. That shareholder vote was ultimately never held and eventually the deal was mutually terminated by Taro and Sun.

Taro's minority shareholders should feel confident in the integrity of the voting process and take comfort in the fact that the Companies Law goes to great lengths to ensure a proper and fair voting procedure, including criminal punishment for anyone who attempts to register and vote as a disinterested minority shareholder who may in fact be an interested shareholder.

We urge fellow minority shareholders who are in favor of our nominees to immediately contact the Taro Board of Directors to voice their support at:

Taro Pharmaceutical Industries Ltd.
14 Hakitor Street, Haifa Bay 2624761, Israel (Tel: +972-4-847-5700); and
Euro Park, Italy House, Yakum 6097200, Israel (Tel: +972-9-971-1800).

Lastly, we would note that the term of External Director is for three years. Thus, the individuals that we collectively elect as shareholders will have a material impact on our Company and on ensuring that all shareholders are treated the same.

Sincerely,

BlueMountain Capital Management, LLC

BlueMountain Capital Management's Letter to the Members of the Board of Directors
Taro Pharmaceutical Industries Ltd.

August 1, 2013

-Via Messenger-

The Members of the Board of Directors
Taro Pharmaceutical Industries Ltd.
14 Hakitor Street, Haifa Bay 26110; and
Euro Park, Italy House, Yakum, Israel

Dear Sirs/Madam,

Re: Election of External Directors of Taro Pharmaceutical Industries Ltd.

BlueMountain Capital Management, LLC together with its affiliates ("BlueMountain") is a global institutional investor with approximately $15 billion of assets under management. Funds managed by BlueMountain are investors in Taro Pharmaceutical Industries Ltd. ("Taro" or the "Company"); specifically, BlueMountain funds initiated their long position in Taro's shares in December 2011. Per the letter BlueMountain issued publicly to fellow shareholders regarding the offer to purchase the minority shares by Sun Pharmaceutical Industries Ltd. ("Sun") in August 2012, we continue to expend considerable time and resources to explore all avenues available to us to ensure that value is maximized for all shareholders of Taro. We will continue to do so as necessary.

As of the date hereof, funds managed by BlueMountain are collectively the owners of 676,737 Ordinary Shares of Taro, representing just over 1.5% of the issued and outstanding share capital of Taro and over 1% of the voting rights of the Company. A copy of our prime brokerage records evidencing the said ownership is enclosed herewith.

The term of office of the two current external directors of Taro (the "External Directors"), Ms. Ilana Avidov Mor and Mr. Dan Biran, will expire on December 30, 2013. Taro's Board has recently nominated them for reelection to office.

Given what we believe to be the significant ongoing opportunity to create shareholder value at Taro, combined with the three year term of External Directors, it is in the best interest of the Company, and definitely in the best interest of all of the minority shareholders of the Company, to elect other individuals to serve as the next External Directors of the Company. The latter is especially true in light of the aforementioned attempt by Sun to purchase the outstanding minority share interest at what we believed to be dramatically below fair value, which attempt was approved by the current External Directors.

Accordingly, we wish to nominate for such office two highly reputable and qualified individuals, Mr. Ben-Ami Rosenfeld and Ms. Adi Bershadsky.

Ms. Adi Bershadsky is a retired Colonel of the Israeli Air Force (first woman ever achieving such rank in the Air Force); served as the IDF's Attaché and Head of the Ministry of Defense Delegation in Poland, the Czech Republic, Slovakia and Hungary; currently serves or previously served as member of several other boards of directors, including among others: Israel Television News Company Ltd. (Channel 2 News); Israeli Military Industries Ltd. (IMI); and Jobokit Holdings Ltd. (a publicly-traded company on TASE). Ms. Bershadsky also served as Business Development and International Marketing Director at Ness A.T. Ltd. and currently serves in a similar position at mPrest Systems (2003) Ltd. (an affiliate of RAFAEL Advanced Defense Systems Ltd.).

We wish to emphasize that both candidates have no personal, business or other relations with BlueMountain.

Both Mr. Rosenfeld and Ms. Bershadsky consented to serve as External Directors of the Company and have been informed of the remuneration payable to External Directors.

As transpires from their background, and as is further apparent from their declarations enclosed herewith, both Mr. Rosenfeld and Ms. Bershadsky possess the requisite qualifications to serve as External Directors of Taro, possessing accounting and financial expertise as well as the required professional qualifications. To the extent that Taro's Board of Directors or its legal counsel are of the opinion that there is a need for any additional information which may be required in order to enable the Company's Audit Committee to determine the independence of the candidates, or for the Board of Directors to determine Mr. Rosenfeld's and Ms. Bershadsky's capability to serve as External Directors possessing accounting and financial expertise, both Ms. Bershadsky and Mr. Rosenfeld will provide any such additional requested information.

Furthermore, if there is a need to amend in any way the enclosed declarations in order for them to meet any formal requirements, Mr. Rosenfeld and Ms. Bershadsky will also be happy to do so.

Section 66(b) of the Companies Law, 5759-1999 (the "Companies Law"), provides that "a shareholder, one or more, who has at least 1% of the voting rights at the Company's general meeting of shareholders, may request the Board of Directors to include a matter on the agenda of any future general meeting, provided that such matter is appropriate for discussion and resolution at a general meeting."

Accordingly, we are formally exercising our right to make these nominations and we kindly request that Taro's Audit Committee and its Board of Directors immediately review the declarations of Mr. Rosenfeld and Ms. Bershadsky and confirm to us in writing, with copy to our Israeli legal counsel, Adv. Oren Shenkar, that both candidates meet the qualifications required for the purpose of serving as External Directors of Taro.

We further expect that Taro will disclose to its shareholders the content of this letter and that the Proxy Statements issued by Taro in connection with the Annual General Meeting of Shareholders, scheduled to be held on September 9^th, 2013, will be amended so as to include Mr. Rosenfeld and Ms. Bershadsky as candidates for office as External Directors of the Company and in any other proxy statement, Proxy Cards or any other instrument provided by the Company for voting in writing at the said meeting ("Ktav Hatzbaa").

We will be happy to meet with the members of the Board of Directors of the Company or a representative of management in order to further discuss any issue which may be applicable to the election of the new External Directors.