Generic-drug maker Sun Pharmaceutical Industries Ltd.’s $571 million purchase of Taro Pharmaceutical Industries Ltd. (NYSE: TARO) has been terminated.

Taro’s board in July rejected an offer of $24.50 per share to buy the company. Sun’s second offer in August would have given Taro shareholders $39.50 in cash per share upon closing and make it a privately-owned subsidiary of Sun, a specialty-pharmaceutical company.

However, on Sept. 19, Taro investor Raging Capital Management LLC issued an open letter to fellow shareholders of Taro suggesting they vote down the proposed "going private" merger. Raging Capital, Taro's fourth-largest shareholder and owner of roughly 0.85% of the shares, said the transaction with Sun "does not maximize value for all shareholders – it only maximizes value for Sun."

Talks that took place over the following five months ultimately led to the two companies' agreeing that terminating the deal was in the best interests of shareholders.

Mumbai-based Sun, which already owns about 66 percent of Taro’s ordinary shares and all of its founding shares, gained management control of the company after a three-year legal battle. Taro, which became a unit of Sun Pharma in September 2010, sells dermatology products throughout the U.S.

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