Taro Pharmaceutical (TARO) – Odd Lot Tender Offer – minimal upside

Current Price – $95.77

Offer Price - $84.5 – $97.5

Potential Gain - 1.8% gain if the offer is priced at the upper limit. Otherwise a loss

Expiration date – August 8, 2013

Odd Lot holders (less than 100 shares) are not subject to proration

SEC Filling

Summary:

Taro Pharmaceutical Industries Ltd., a company incorporated under the laws of the State of Israel (the “Company,” “we,” “our” or “us”), is offering to purchase up to $200 million in value of shares of its ordinary shares, NIS 0.0001 nominal (par) value per share (the “ordinary shares”), at a price not greater than $97.50 per share nor less than $84.50 per share.

At the maximum Final Purchase Price of $97.50 per share, we would purchase 2,051,282 shares if the Offer is fully subscribed, which would represent approximately 4.6% of the issued and outstanding shares as of November 20, 2013. At the minimum Final Purchase Price of $84.50 per share, we would purchase 2,366,863 shares if the Offer is fully subscribed, which would represent approximately 5.3% of the issued and outstanding shares as of November 20, 2013.

Proration:

If the conditions of the Offer have been satisfied or waived and shares having an aggregate value (based on the Final Purchase Price) in excess of $200 million (or such greater amount as we may elect to purchase, subject to applicable law) have been properly tendered at or below the Final Purchase Price and not properly withdrawn prior to the Expiration Time, we will purchase shares:

- first, from all holders of “odd lots” of fewer than 100 shares who properly tender all of their shares at or below the Final Purchase Price and do not properly withdraw them before the Expiration Time;

- second, from all other stockholders who properly tender shares at or below the Final Purchase Price, on a pro rata basis (except for stockholders who tendered shares conditionally for which the condition was not satisfied); and

- third, only if necessary to permit us to purchase shares having an aggregate purchase price of $200 million (or such greater amount as we may elect, subject to applicable law), from holders who have tendered shares conditionally at or below the Final Purchase Price (for which the condition was not initially satisfied) by random lot, to the extent feasible. To be eligible for purchase by random lot, stockholders whose shares are conditionally tendered must have tendered all of their shares.

Source of Funds:

Assuming that the Offer is fully subscribed, the aggregate purchase price will be $200 million. We expect that expenses for the Offer will be approximately $1.9 million.

We anticipate that we will pay for the shares tendered in the Offer and all expenses applicable to the Offer from cash and cash equivalents and short-term bank deposits. The Offer is not conditioned upon the receipt of financing.