Teva in Crisis: Group of Investors May Offer to Buy Part of Teva’s Israel Operations

Topaz brothers recruiting investors to make bid as unions ready to step up labor actions

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Workers of Teva Pharmaceutical Industries stand at the entrance to their facility in Ashdod, Israel December 17, 2017.
Workers of Teva Pharmaceutical Industries stand at the entrance to their facility in Ashdod, Israel December 17, 2017. Credit: REUTERS/Amir Cohen

As Teva Pharmaceuticals workers readied to step up their labor actions in protest against expected mass layoffs and factory closings, an investor group emerged Monday that may offer to buy part of the company’s Israel operations and preserve hundreds of jobs.

Dan and Shmuel Topaz, the founders and former owners of Ham-Let, a maker of industrial equipment, are forming an investor group with an unnamed multinational maker of medical devices to buy Teva Medical, which makes equipment for medical laboratories and hospitals.

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“We have all the relevant tools — knowledge, managerial ability and a professional track record needed to keep a sustainable industry in Israel going,” the Topaz brothers said in a statement. “We believe that industry is the main engine of Israeli economic growth and we will work to keep it that way by way of strategic international partnerships.”

Teva Medical employs about 400 people in Ashdod and Kiryat Shmona and has an annual turnover of as much as $120 million. Its key products include Tevadapter, a device used to ensure safe compounding and administration of hazardous drugs.

The Topaz brothers believe that with the sales and marketing resources of a multinational, Teva Medical could grow 10% to 15% a year as a standalone company. They are reportedly willing to pay in the hundreds of millions of shekels for the business.

In the meantime, Teva workers and their unions vowed to step up strikes and other labor actions Tuesday as Prime Minister Benjamin Netanyahu, Finance Minister Moshe Kahlon and Economy and Industry Minister Eli Cohen are due to meet with Teva CEO Kare Schultz.

On Sunday a nationwide half-day strike called by the Histradrut labor federation affected most of the public sector and a number of key industries, but on Monday only Teva facilities were affected. Some went on strike, while others suspended operations briefly for union meetings. In Jerusalem, where two Teva plants are slated for closure, workers barricaded themselves inside.

As union leaders met with Kahlon and Cohen at the treasury in Jerusalem, hundreds of Teva employees, many wearing white lab coats, blocked the entrance to the building.

“The government of Israel stands behind Teva’s workers and won’t abandon them. The government will use all the tools at its disposal to try and reduce the number of layoffs and factory closures,” Kahlon said.

However, a source close to the talks said that neither Kahlon nor Cohen made any promises. “The plan was to listen to what the workers were saying ahead of the meeting with Schultz. The atmosphere in the meeting was tense. ... [The workers] are no longer in denial that the layoffs won’t happen but they are still leaving the door open in the hope something will change,” the source said.

Other sources said Netanyahu and his fellow cabinet ministers would use Teva’s tax benefits to pressure Schultz. The company is in talks about tax assessments going back to 2014 and new rules entitle it to additional benefits based on its intellectual property assets registered in Israel.

That might also make use of the power of the government’s and Jerusalem municipality to influence the value of land that the two factories in the city occupy, sources said.

The government is likely to give highest priority to keeping the pill factory in Jerusalem open because it employs more people (650) and is believed to be more profitable than a smaller facility that employs just 200.

After that meeting, Avi Nissenkorn, the head of the Histadrut labor federation, called for a strike at all Teva facilities on Tuesday and said 1,500 employees and their families would protest in front of the Prime Minister’s Office.

Nissenkorn said he sought to reduce the number of layoffs in Israel, which is now slated at 1,700, and for Teva to commit to keeping its headquarters in Israel. He promised that in fighting to pare back the number of job cuts he would not distinguish between employees represented by the Histadrut and other affiliated with other unions.

“We are contending with a mega-event that the Israeli economy hasn’t experienced in years and the government, the Histadrut and workers must join hands in this struggle for the future of Teva and to ensure the status of Israeli industry,” he said.

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