Bloomberg News

BlueMountain Lifts Taro After JPMorgan Profit: Israel Overnight

August 04, 2013

Taro Pharmaceutical Industries Ltd. (TARO:US) capped a six-week rally as BlueMountain Capital Management LLC, the firm that profited from JPMorgan Chase & Co. (JPM:US)’s trading loss, nominated two board members for the Israeli drugmaker.

Shares of the Yakum, Israel-based company jumped 4.5 percent in the five-day period ended Aug. 2. The Bloomberg Israel-US Equity Index gained 2.4 percent for the week, led by SodaStream (SODA:US) International Ltd. EZchip Semiconductor Ltd. (EZCH) rallied 5.5 percent to trade at the largest premium among dual-listed companies. Teva Pharmaceutical Industries Ltd. (TEVA) posted the biggest weekly drop in 2013 as profit declined.

BlueMountain, the New York-based hedge fund that holds a 1.5 percent stake (TARO:US) in Taro, reaped as much as $300 million from JPMorgan’s more than $6.2 billion trading loss last year by betting against the bank and then helping it unwind positions, people with knowledge of the matter said at the time. Taro has rallied 27 percent since Feb. 8 when Sun Pharmaceutical Industries Ltd. (SUNP), its majority shareholder, ended a bid to take over the company at a discount.

“The increased activism by BlueMountain will certainly keep a check and a balance with respect to Sun’s control of Taro,” Mitchell Sacks, the chief investment officer of Grand Slam Asset Management which owns 65,000 Taro shares, said in a telephone interview from Fort Lee, New Jersey on Aug. 2. “They’ve tried to acquire us and they failed because they came out with offers that were substantially below what the company was worth.”

‘Pivotal Role’

“There exists a significant ongoing opportunity to create shareholder value at Taro,” BlueMountain said in a statement Aug. 1. One of the two board members nominated by the hedge-fund firm is a former chief operating officer of Teva.

Sun, India’s largest drugmaker by market value, terminated a six-year effort to acquire the stock that it doesn’t already own in Taro as shareholders of the Israeli pharmaceutical company opposed the $39.50-a-share deal, the two companies said in a statement Feb. 8.

Taro, whose products include treatments for head lice and skin discoloration, climbed last week to $65.80, after surging to the highest price since February 2004 on July 29.

The Bloomberg Israel-US measure rose to 97.89 last week, adding to its 13 percent gain this year. The TA-25 Index (TA-25) today extended last week’s 1.7 percent drop, slipping 0.1 percent to 1,206.31 at 9:59 a.m. in Israel.

SodaStream, a maker of home soda machines, surged 14 percent to a one-month high of $65.63. The Airport City, Israel-based company raised its 2013 sales outlook on July 31 and reported earnings that beat analysts’ estimates.

Teva Slumps

EZchip, based in Yokneam, Israel, surged to $32.20, the highest price since Feb. 12. The chipmaker rallied for nine straight days in New York and closed at a 1.8 percent premium to its Tel Aviv-listed shares. The Israel shares this morning narrowed the gap, gaining 1.4 percent to 114.40, or $32.07.

Teva, the world’s largest maker of generic drugs, slumped 4.5 percent to $38.90 for the week. Second-quarter profit fell 8.9 percent as the Petach Tikva, Israel-based company introduced fewer new generic medicines. The shares in Tel Aviv today fell 0.9 percent to 137.90 shekels, or $38.66.

The shekel pared a weekly gain on Aug. 2 after Leonardo Leiderman became the second candidate in a week to withdraw from the race to take over the Bank of Israel. Jacob Frenkel announced on July 29 he was pulling out. The currency, which rose 0.4 percent last week to 3.5668 per U.S. dollar, lost 0.1 percent on Aug. 2.

To contact the reporter on this story: Jessica Summers in New York at jsummers17@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net


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Companies Mentioned

  • TARO
    (Taro Pharmaceutical Industries Ltd)
    • $151.34 USD
    • -3.44
    • -2.27%
  • JPM
    (JPMorgan Chase & Co)
    • $59.94 USD
    • -0.09
    • -0.15%
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