Israeli Prime Minister Benjamin Netanyahu said his government would do its utmost to blunt the effect of job cuts at Teva Pharmaceutical Industries Ltd as the debt-saddled company carries out its restructuring plan.
Netanyahu and Minister of Finance Moshe Kahlon are to meet this week with Teva chief executive officer Kare Schultz to try to “minimize the blow to workers,” according to an e-mailed statement from the prime minister’s office.
Netanyahu said he would do everything possible to prevent the closure of local plants and ensure that Teva, based near Tel Aviv, “will remain an Israeli company.”
Netanyahu stepped in after Schultz announced plans last week to slash 25 percent of Teva’s workforce and suspend dividends, aiming to cut US$3 billion in costs and whittle down a debt pile more than twice the size of Teva’s market capitalization.
Striking workers on Sunday idled Israel’s international airport, government offices, banks and stock market for half a day, pressing to scale back Teva’s plan to cut 14,000 jobs, including 1,700 in Israel.
The protesting employees tied up morning rush-hour traffic and burned tires outside a Jerusalem factory, while some barricaded themselves inside. Hundreds of Teva employees marched to Netanyahu’s office before Cabinet members arrived for their weekly meeting.
The government is considering a grant to Teva that would enable it to cut fewer Israeli jobs, the Haaretz newspaper said, without saying how it got the information.
In Israel, Teva had been viewed with pride for decades as the nation’s only corporate giant by global standards, with so many Israelis owning Teva shares that it is referred to as “the people’s stock.” One of the world’s biggest generic drugmakers, it is also one of Israel’s biggest employers. As a symbol of Israel’s entrepreneurial spirit, its meltdown is therefore seen as much more than just another failed business.
A walkout that the Histadrut labor federation called on Sunday in solidarity with Teva employees lasted until noon.
“Our factory is bleeding and the situation is bleak,” Teva union leader Itzik Ben-Simon told Israel Radio.
The company is monitoring the protests and seeking to minimize any effect on operations, spokesman Yonatan Beker said by telephone.
“Teva’s supply chain is evaluating its product supplies and production alternatives for all its products at any disrupted facilities, and will update its customers directly on the matter,” the company said in a statement.
Teva has been struggling since it paid almost US$41 billion last year to acquire Allergan PLC’s generics unit, a deal that failed to yield the anticipated sales boost. Compounding the problem is the loss of its monopoly on Copaxone, a multiple-sclerosis drug that at one point generated half of Teva’s profits.
Teva shares on Sunday rose as much as 2.7 percent in Tel Aviv trading, after jumping 13 percent on Thursday last week when Schultz outlined the restructuring plan. Teva’s US depositary receipts rose 10 percent on Thursday last week in New York and 8 percent the following day.
The drugmaker, whose expenses are to total US$16.1 billion this year, said most of the cost reduction is to take place next year.
It also is to record a restructuring charge of at least US$700 million, it said.
Schultz said his top priority is to bring Teva’s leverage below four times earnings before interest, taxes, depreciation and amortization by the end of 2020.
The ratio was 4.7 last quarter.
The proposals include paying down US$4 billion of bank loans within a “relatively short” period, he said.
Schultz, who was offered US$40 million in cash and stock to take the CEO job last month, swiftly instituted a management shakeup and announced plans to reorganize Teva’s generic and branded drug businesses into a single, streamlined entity.
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