"I sold off my investment in Teva long ago, nearly two years ago," Benny Landa, chairman of Landa Group, told Keren Neubach in an interview on Galei Tzahal (Israel Army Radio). "In my view, Teva has ceased to be a genuinely Israeli company. If I thought at one time that I could influence the board, or the company's direction, it became clear when they appointed a non-Israeli CEO, who appointed a non-Israeli management, and the company closed plants here and reduced its impact on the Israeli economy, that there was no longer any point.
"At the beginning, seven years ago, when I invested in Teva, I did believe in Jeremy Levin and Michael Hayden's vision of turning Teva into a leader in innovative drugs. After they fired Jeremy Levin, I was in shock, because it was clear that the firing was a caprice of the board, so I wanted to influence, to change… Teva was the flagship of Israeli industry, the only flagship of the Israeli economy. I tried to bring influence to bear for years, but to no avail. When they started closing plants in Israel, I realized that there was no-one to talk to and that it was no longer for me," Landa added.
Attempting to explain in brief what led to Teva's collapse, Landa said, "The big decline from $70 per share didn't start three years ago, but five-six years ago when they fired Jeremy Levin. Afterwards they admitted that it was idiotic; there was no real reason for dismissing him. After that, they hired consultants to find a CEO of global standing, and then a few weeks later they announced 'Hey, the best CEO there could possibly be has been under our nose the whole time, one of the company's directors, Erez Vigodman,' but it wasn't true, he had no background appropriate to a CEO of the company. That same board simply lent a hand to every crazy move by Vigodman and his management team, whether it was the attempt to take over Mylan or the acquisition of Rimsa.
"Buying a big company, if you do a healthy due diligence, can be a good thing, but that is not what happened with the Mexican company or with Actavis. Everyone knows that when you do business in China or Mexico, the working assumption has to be that there's fraud, but they did due diligence lasting two weeks for an acquisition costing more than $2 billion! How is it possible to explain that the board could approve a thing like that? Even if the CEO and CFO were reckless, the board was supposed to know, and that was the problem the whole time: the board was not experienced in the pharma industry, and was not appropriate for a company of this kind."
On the opioids affair and the other challenges that Teva faces, Landa said, "I'm not familiar with the details, but if it reaches a compromise like the one it reached in the first case (versus the State of Oklahoma - G. B-S.) then that could get it into a financial mess. But that isn't the problem; the debt is. There are analysts who think that it will no longer be able to service its debt. It may be saved temporarily by making another offering, but it needs cash flow to service the debt. The worst case is that it will be closed down, but I don’t think that will happen. The likeliest scenario is that Teva will be broken up.
"I wouldn't invest in Teva as a financial investment. I did it out of belief in the company as a generator of employment and a contributor to the State of Israel's GDP. Today, HP is more significant for Israel than Teva. The painful thing is that closing a plant affects not just the workers but the whole food chain, such as the music teacher of the worker's child; it's just a catastrophe," Landa concluded.
Published by Globes, Israel business news - en.globes.co.il - on August 12, 2019
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