The management of Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) lost nearly NIS 10 million by agreeing to sell its plant on Har Hahotzvim in Jerusalem for NIS 171 million. A week ago, Teva announced that Levinstein Properties Ltd. (TASE: LVPR) would buy its plant at this price as part of its sale of assets aimed at reducing its debt, which totaled $27.1 billion as of the end of 2018. A letter sent by French-Moroccan Jewish businessperson Meir Azruel to Teva Israel CEO Avinoam Sapir shows that his bid was not considered, even though it was higher.
The plant, located on a 31-dunam (7.75-acre) site, contains 34,000 square meters of built-up space and 70,000 in unused construction rights. The deal, which is subject to approval by Teva's board of directors, is slated for completion in mid-2020. The sale process was not covered by the Mandatory Tenders Law or subject to court approval, but in the sale of properties of this type, especially properties belonging to public companies, the prevailing practice is to hold a pricing procedure among the bidders in order to allow each of them to improve their bid, thereby maximizing the proceeds.
According to the letter, sent through Adv. Maimon Avitan, Azruel submitted a bid to acquire the plant for NIS 161 million on March 4, together with a bank check for 5% of the amount. Four days later, the bidder announced that he wanted to improve his bid to NIS 180 million, and his representative brought another bank check to bring the deposit up to 5% of the revised sum. Azruel wrote that this announcement was not answered, and three days later, he learned that his bid had not been accepted. He contacted the company and said that he was willing to improve his bid if necessary. According to Azruel, however, Teva's representative answered that after examining the bids, the company had decided to begin negotiations with a different potential bidder. It was later learned that Levinstein's winning bid was only NIS 171 million.
The letter asserted that Teva's representative had claimed a number of time that the company was not bound by the Mandatory Tenders Law, and was not obligated to accept any bid whatsoever, but since Azruel's improved bid had not been taken into account, "This arouses very deep concern of mismanagement, to say the least… this conduct is improper, unprecedented,… unfair, shows bad faith by conducting a distorted and unequal procedure, the results of which are unacceptable according to any criterion."
Azruel wrote in the letter that he was willing to revise his bid to NIS 181 million, and to conduct additional negotiations if necessary. He warned, "Depriving the company treasury of at least NIS 10 million exposes it and the relevant company officeholders to derivative claims and class action suits by shareholders, who naturally expect proper conduct and actions that will maximize the proceeds from the sale of the company's assets."
Teva said in response, "We will respond to the allegations in the legal proceeding, not through the media."
Published by Globes, Israel business news - en.globes.co.il - on March 26, 2019
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