Raging Capital Management Supports Vote "FOR" Election of BlueMountain Capital's External Director Nominees at Taro Pharmaceutical Annual General Meeting of Shareholders

ROCKY HILL, N.J., Sept. 4, 2013 /PRNewswire/ -- Raging Capital Management, LLC ("Raging Capital"), one of the largest unaffiliated shareholders of Taro Pharmaceutical Industries Ltd. ("Taro") (NYSE: TARO), has issued an open letter to shareholders of Taro announcing Raging Capital's intention to support the election of BlueMountain Capital Management, LLC's External Director nominees to the Board of Directors of Taro at the upcoming annual general meeting of shareholders. 

The full text of the letter follows:

September 4, 2013

Dear Fellow Taro Pharmaceutical Shareholders:

As one of the largest unaffiliated shareholders of Taro Pharmaceutical Industries Ltd. ("Taro") since 2010, Raging Capital Management, LLC ("Raging Capital") intends to support the election of BlueMountain Capital Management, LLC's ("BlueMountain") director nominees to the Taro Board of Directors by voting "FOR" Proposal #8 (To elect Mr. Ben-Ami Rosenfeld and Ms. Adi Bershadsky to the Board as External Directors) and "AGAINST" Proposal #7 (To re-elect Mrs. Ilana Avidov Mor and Mr. Dan Biran to the Board as External Directors).  We believe BlueMountain's candidates are highly-qualified and are truly independent.

Taro is a unique and valuable asset with a strong platform and product portfolio in North America, which is the world's most valuable generics market.  Yet the market value of Taro shares has continued to be obfuscated by multiple, self-serving "take under" attempts by its majority shareholder, Sun Pharmaceutical Industries Ltd. ("Sun").  Our concerns at Taro are magnified by the fact that four of Taro's five Internal Directors either currently work or have previously worked for or are otherwise affiliated with Sun, and a number of them are significant shareholders of Sun.

We believe the current External Directors have clear conflicts of interest and the collective Board's governance track record at Taro has been abysmal.  It was only after a lengthy nine-month process that the Board rejected Sun's original $24.50 per share offer to acquire the remaining shares of Taro, only to then unanimously recommend that minority shareholders accept Sun's second offer of $39.50 per share.  Had this second offer succeeded, Sun would have effectively purchased Taro for an estimated price of just 3.6x Taro's 2012 EV/EBITDA (enterprise value / earnings before interest, taxes, depreciation and amortization) multiple, a proposition which would have grossly undervalued Taro to the detriment of the unaffiliated shareholders. 

In a misguided attempt at persuasion, the Board advocates for the re-election of the incumbent External Directors by highlighting the successful share performance of Taro – even though the majority of Taro's gains came after Sun withdrew its $39.50 offer for Taro due to an apparent lack of minority shareholder support.  Worse, they ignore the fact that Taro shares trade at just over 6x EV/EBITDA, a massive discount to industry peers.  For example, Perrigo Company (PRGO) trades at 14.9x trailing twelve months EV/EBITDA, Actavis, Inc. (ACT) at 18.7x, and Dr. Reddy's Laboratories Ltd. (RDY) at 15.3x.  Sun itself trades at 17.0x consolidated EV/EBITDA with Taro accounting for approximately 40% of those earnings.

It is our strong view that replacing the current External Directors with truly independent directors would enhance Taro's corporate governance, reduce conflicts of interest, improve transparency and upgrade the protections for the Company's minority shareholders.  We further believe that these improvements would then translate into a higher valuation multiple for Taro shares that is more in line with comparable peers.  We believe that this Board should be focused on running Taro for the benefit of all shareholders and that by doing so shareholder value will be enhanced. 

WE INTEND TO VOTE "FOR" PROPOSAL #8 AND "AGAINST" PROPOSAL #7.

WE CALL UPON OUR FELLOW UNAFFILIATED SHAREHOLDERS TO DO THE SAME!

We encourage you to carefully review BlueMountain's most recent communications (August 26 Press Release and August 1 Press Release) and their example of a completed voting instruction form (Completed VIF).  Please be mindful of the September 10, 2013, 3:00 AM EDT voting deadline.

Sincerely,

William C. Martin

Chairman & Chief Investment Officer
Raging Capital Management, LLC

Investor Contact:
William C. Martin
Raging Capital Management, LLC
(609) 357-1870

SOURCE Raging Capital Management, LLC