Teva CEO turns down PM's demands

Kare Schultz Photo: PR

The prime minister and other ministers failed to convince Teva CEO Kare Schultz to retract some of his company's planned layoffs in Israel.

Prime Minister Benjamin Netanyahu, the minister of finance, the minister of economy and industry, and the minister of labor, social affairs, and social services met today in Jerusalem with Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) CEO Kare Schultz. The directors general of the Prime Minister's Office and the Ministry of Finance, the head of the National Economic Council, and the Ministry of Finance budget department head also attended the meeting.

At the meeting, the prime minister demanded that Teva should retain its facilities in Jerusalem. Schultz did not accept the demand, but offered to work together with the governemnt to train workers and find alternative employment solutions for most of the workers in the plants to be closed. It was agreed at the meeting to establish a joint team of Teva and the government in order to find training solutions for the workers. Schultz reiterated his commitment to keep the company's headquarters and R&D in Israel.

Following the meeting, Teva released a statement saying, "Teva's current business reality requires immediate and significant action to ensure the company's future. Without taking drastic steps in the coming weeks and months, the company will be increasingly vulnerable to potential takeover. Accordingly, Teva launched a comprehensive global restructuring program, crucial to restoring its financial security and stabilizing its business. The restructuring will result in the reduction of 14,000 positions worldwide. Part of the plan is the comprehensive restructuring and optimization of Teva's manufacturing network, following careful analysis of each of its more than 80 plants around the world."

After the meeting, Schultz said, "I am truly appreciative for the substantial support that Teva has received from the Government of the State of Israel over the years and under the leadership of Prime Minister Netanyahu and for the recognition of Teva's major contribution to the economy of the State of Israel.

"The measures included in the restructuring plan are aimed to achieve our shared aspiration to sustain Teva as a strong global company, managed out of and based in Israel. We will do this to the benefit of all our stakeholders, worldwide. As the CEO of a company largely owned by global investors, we must ensure that all decisions we make are financially and economically sound. These measures are painful, but absolutely vital. They will be carried out in all of our global operations - the US, Europe, Growth Markets, and inevitably in Israel - in a fair and respectful manner.

"Unfortunately, Teva is unable to consent to the request of the prime minister and ministers and avoid the closure of the plant in Jerusalem and the company will continue in the phased closure of the plant by the end of 2019. Teva will cooperate fully with the team established by the prime minister in order to assist the workers who will leave the company to find alternative employment, training and support.

"In order for Teva to remain an Israeli company and continue to prosper in Israel, and to continue with our significant contribution to the Israeli economy we must first and foremost save our company. I have taken upon myself to maintain the global headquarters of Teva in Israel, including my own office. I am committed to maintaining a strong presence of R&D, as well as preserving most of our existing manufacturing in Israel in the future."

MK Itzik Shmuli (Zionist Union) a member of the Knesset Labor Committee, said in response to Teva's statement, "Teva's CEO simply pissed on the entire country. It's regrettable that he has no regard even for the prime minister, and is not prepared to show even the least flexibility on his plan. The time has come for the government to abandon its fawning and submissive approach and adopt a more determined policy, including enforcement of the real tax assessment of the past few years, after Teva spat in the well from which it has drawn such huge sums."

Teva workers continued their protest today against the company's plan to cut 1,75O jobs in Israel, out of 14,000 layoffs worldwide, and to shut two facilities in Jerusalem. All Teva's sites in Israel were strikebound today, and workers demonstrated outside the Prime Minister's Office where the meeting with Schultz was held.

Against a background of calls to cancel tax benefits that Teva has received down the years, Israel Manufacturers Association chairman Shraga Brosh said in a session of the Knesset Finance Committee this morning, "Teva should be supported and encouraged. If we do that, there's a chance that it will close its plant in Ireland and save the plant in Jerusalem." He said that the Finance Committee had proved its ability to save plants in danger of closure in the past, and that it should act today to preserve Teva's activity in Israel and shield it from the attacks.

Brosh criticized members of Knesset who called for Teva's tax breaks to be ended. "Teva is a private company in a desperate crisis, and so it has to reduce its workforce by 50% around the world. Unless it does so, it is liable to collapse, with all the tremendous negative consequences of that for the Israeli economy and Israeli society. The emphasis must therefore be on how we help Teva extricate itself from the crisis, and not on how we damage it further. The calls from some Knesset members to deny Teva tax benefits have only caused damage, because it is no longer relevant what it received in the past, and in any event it received what it did lawfully under the Law for the Encouragement of Capital Investment, and all major companies active here are entitled to the same benefits under that law. We must keep Teva here, and not chase it away."

Published by Globes [online], Israel Business News - - on December 19, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Kare Schultz Photo: PR
Kare Schultz Photo: PR
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