The Ra'anana municipality will refund NIS 36 million in a betterment levy paid by Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA). Teva eventually decided against building its headquarters in the city. The money, however, will go to a company jointly owned by technology company Amdocs Ltd. (NYSE: DOX) and businessperson George Horesh, who repurchased the land from Teva in order to build a new campus on it for Amdocs. Amdocs and Horesh undertook to pay the betterment levy.
The Ra'anana municipality levied the betterment tax after Teva bought the land on Tidhar Street in the northern Ra'anana industrial zone. Teva bought the land from Horesh in 2015 and planned to build a new headquarters on the site, to which it would move activities from sites in Petah Tikva and Netanya. Teva's business was prospering at the time, but the financial crisis that subsequently afflicted the company, due to the need to service the enormous debt it took in order to finance its 2016 acquisition of Actavis, made Teva abandon construction of a new headquarters in Ra'anana. In 2017, Horesh exercised his right to buy back the land from Teva in partnership with Amdocs, then managed by CEO Eli Gelman and currently managed by CEO Shuky Sheffer. Horesh originally bought the land in 2010 from Comverse, which originally planned to build a campus there, but which, like Teva, eventually abandoned the plan.
A Central District Planning and Building Appeals Commission, which met two weeks ago, granted the appeal filed by Teva and Amdocs Properties, a company owned by Amdocs Israel and Union Motors, against the betterment tax. The appeals commission ruled that the respondent's tax assessment and the resulting demand for payment were vacated, and that the Ra'anana municipality would reimburse Amdocs Properties for the tax within 30 days, plus linkage differences dating back to August 2018. The Ra'anana municipality plans to appeal the ruling.
It was recently reported that Electra Ltd. (TASE: ELTR) would build the new Ra'anana campus for Amdocs for NIS 330 million. The campus will contain four office buildings, development space, and three underground floors.
Amdocs was attacked last week by Spruce Point Capital, a company specializing in shorting shares, which recommended "Sell" for the company's shares. One of Spruce's arguments was that the campus under construction Ra'anana would increase the company's capitalization costs. Amdocs's share price plunged 9% in response.
At the same time, Teva, under the management of CEO Kare Schultz, recently selected Ramat Hahayal as the location for its new headquarters, and will move next year to offices rented from Vitania Ltd. (TASE:VTNA) at an annual rent of NIS 26.7 million. The 17-storey building is located on Dvorah Haneviah Street near to the entrance to the Kiryat Atidim industrial zone.
The Ra'anana municipality said, "The Ra'anana municipality is obligated to return NIS 36 million paid to it for a betterment levy in respect of Teva's overall plan. This money was to have been kept in a special trust account under clear instructions from the legal advisors. Instead, it was added to the municipality's current budget. The city's new leadership will now have to pay the debt."
Published by Globes, Israel business news - en.globes.co.il - on January 28, 2019
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