I would rather see Taro commence paying a quarterly dividend of 20% of its net quarterly earnings than institute a buy-back of shares that will produce even a greater percentage of ownership of Sun Pharma.
I meant to say taro is trading at less than 6 times annualized q4 ebitda
If Mylan offered 19 times ebitda for taro, share buyback at $65 using $390m cash would have added $20 per share additional value to remaining shareholders. Compare this to $390m dividend which would come out to be post tax 312/44.5 or around $7 per share.
also dont forget dividend will give SUN money to finance another offer
don't forget the symbolism effect of buyback (just announcement) . it is telling market that board thinks value of shares are undervalued and the board will take care of shareholders.
because of the price spike expected after announcement of buy back , it will ALSO insure us from another low ball offer from majority shareholder
If one keeps this stock in an I..R.A..there is no federal tax until money is withdrawn. Some mutual funds require a dividend in order to invest in a stock. I think a cash dividend would increas the market value of the stock.