The real estate deal between Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) and the Levinstein group has finally be cancelled. News that the deal would be cancelled was first reported by "Globes" three months ago. Just two weeks later, Levinstein confirmed that it was in talks with Teva on the possibility of cancelling the deal or changing its terms.
The deal in question was for the sale of a property in Jerusalem's Har Hotzvim industrial zone that housed Teva's tablets factory until it was decided to end that activity as part of the major streamlining program that the company has been implementing in recent years in order to reduce its debt. In March 2019, Teva and Levinstein signed an agreement for the sale of the property for NIS 171 million. The deal was due to have been completed in June 2020, but completion was postponed to the third quarter of 2020. The property has 34,000 square meters of built space, with rights for 70,000 square meters.
The deal was signed with Levinstein Properties Ltd. and its parent company Meshulam Levinstein Contracting and Engineering Ltd. (TASE:LEVI), the division between them being 60% for the subsidiary and 40% for the parent company. The group planned to let the property for various uses, and to exploit the additional building rights. The two companies made advance payments to Teva in 2019 and paid purchase tax.
The Levinstein group notified the Tel Aviv Stock Exchange yesterday that "in the light of disagreements between the sides over actions that should be carried out before the property is handed over, the sides cancelled the agreement by mutual consent." Teva will repay Levinstein the advance payments, and each side will bear its own costs. A mutual waiver of legal claims has been signed.
As "Globes" reported in July, as in many other cases in which attempts have been made to change the terms of signed agreements or cancel them altogether, because of the coronavirus crisis, Levinstein tried to alter or cancel its deal with Teva. Among other things, the question arose whether the site was contaminated, since it had been used for years for pharmaceuticals manufacture. After an inspection by the Ministry of Environmental Protection, however, Teva was given confirmation that there was no contamination of the land.
In the framework of the streamlining program, a nearby Teva plant for producing inhalers was also closed, and the property on which it stood was put up for sale. Teva sold the property to Vitania Ltd. (TASE:VTNA.B1 for NIS 107 million - a deal that has already been completed. Teva has managed to reduce its debt by $8.4 billion since the streamlining program began, but total debt at the end of the second quarter was still a high $26.3 billion.
Published by Globes, Israel business news - en.globes.co.il - on October 22, 2020
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