Two years ago, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) decided to build a new headquarters, and bought land in the northern Ra'anana industrial zone for the purpose. At around the same time, "Globes" reported that software company Amdocs Ltd. (Nasdaq: DOX), whose offices are located close to the southern Ra'anana junction, was looking for a new site in either the central or Sharon regions. Amdocs's lease with REIT 1 Ltd. (TASE:RIT1), the owner of its current headquarters, expires at the end of 2019.
Teva has been through a lot in the two ensuing years, including the firing of CEO Erez Vigodman, after the market lost confidence in the company and its performance. Teva, which is bearing the burden of huge debt it acquired in order to finance its acquisition of Actavis, the biggest acquisition in Teva's history, is now looking for ways to cut costs. One of the results was the suspension of construction of the company's new Ra'anana headquarters.
Amdocs, in contrast, has had no special upheavals during the past two years. The company has continued looking for a new location for its business the entire time. Does Teva's suspension of construction constitute an opportunity for Amdocs? Market sources believe that Amdocs is currently in initial negotiations, and is considering the possibility of moving its offices to the site currently owned by Teva.
Amdocs is apparently considering having an income producing real estate entity or an institutional concern build offices on the land, which Amdocs will rent under a long-term lease. Amdocs did not respond to the report.
Managed by CEO Eli Gelman, Amdocs provides IT solutions and systems for communications companies. The company's market cap is $9.1 billion.
If Amdocs does take Teva's place and moves to the site in question, located between Dafna, Tidhar, and Dolev Streets in Ra'anana, it will be only four kilometers away from its current location. Teva planned to move its global headquarters, currently located in Petah Tikva, to the site, as well as other activities currently taking place in Petah Tikva and Netanya.
The lot in the northern Ra'anana industrial zone is part of a huge lot purchased by from Comverse Inc. (Nasdaq: CNSI) by businessman George Horesh in 2010. The entire lot covers 55 dunam (13.75 acres). According to the particulars of the deal listed on the Israel Tax Authority website, the land was purchased for NIS 106 million. Horesh sold 11 dunam (2.375 acres) of the site to software giant SAP for NIS 40 million. The companies that were to have built Teva's headquarters were Electra Ltd. (TASE: ELTR) and Tidhar Group. According to Tidhar's figures from last year, the total cost of the project was estimated at NIS 1.2 billion.
A previous letter from Amdocs to its employees stated, "The search (for a new location for a property, S.H.-V.) will be in either central Israel or the Sharon region. The main criteria are the best experience for the employees, including transportation concessions and facilities adapted to the region, as well as business, cost, and other operational considerations."
Published by Globes [online], Israel Business News - www.globes-online.com - on May 9, 2017
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