We have been exposed quite a bit to Erez Vigodman, Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) resigning CEO, over the past year. His presentations were genuinely persuasive, and his confidence in his strategy could not be questioned. It looked like this reasonable, appreciated, and considerate man, who came from the world of finance (an accountant by trade) was preaching to the converted: himself and Teva's management and board of directors. The bottom line is that Allergan's generic division was too big a pill for Teva to swallow - not because the division is not good enough, but because Teva paid an enormous price for it, leaving Teva with a $40 billion debt. Allergan realized that Vigodman was under pressure to find an alternative acquisition to Mylan N.V. (Nasdaq: MYL; TASE: MYL), and the deal was closed in record time.
It is very nice that Prof. Yitzhak Peterburg is stepping into Vigodman's shoes as temporary CEO. The question is why he and the entire board of directors, which was swept along into following Vigodman, is not rising as one man and paying the price - especially Peterburg. After all, as chairman, he is responsible for failures to the same extent as Vigodman, or even more. Unfortunately, the board of directors, which blindly followed Vigodman into such a questionable deal, after such a big gamble, does not deserve the trust of the company's shareholders, in other words, the public. As far as we are concerned, they are a bunch of marionettes.
The minutes of the Teva board of directors' meetings are not available to us, but the fact that the deal was approved in those meetings raises some trenchant questions, all of which should be directed to the man who headed the board until now - Peterburg. After all, the board of directors is supposed to supervise management, not swallow automatically whatever it is fed. Did Peterburg and his fellow directors fulfill their duty of care to the company? Did Peterburg ask whether there was an alternative to the deal, whether the company was gambling on the wrong horse, whether the company could service the huge resulting debt, especially in view of the anticipated competition for Copaxone, its golden egg? Most important of all, did Peterburg ask whether the company could escape the deal, and on what terms, what legal procedures that would involve, and what the legal chances of it would be? If so, then please: let Peterburg talk to the public and display to it the weighty discussions that preceded the signing of this critical agreement, which sent Teva's share price into a tailspin, got the company in trouble, and is liable to cost the company its independence.
Published by Globes [online], Israel Business News - www.globes-online.com - on February 7, 2017
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