Teva May Try to Break Market Fall With a Merger

Teva could even become vulnerable to an activist investor, according to Matrix Asset Advisors.

With a market cap of $32.9 billion, Teva has performed dismally this year among drug stocks. Mylan’s market cap is $16 billion and Valeant’s market cap is $35.4 billion.

Bloomberg issued a withering description of Teva’s position: “As peers such as Pfizer and Actavis generated windfalls for shareholders with breakups and takeovers, Teva tumbled this month to its cheapest price-sales ratio…. Teva hasn’t replaced the CEO who stepped down in October amid a dispute with the board, adding to uncertainty over how it will compensate for lost sales when generic rivals challenge its top-selling medicine. Analysts predict revenue this year will fall for the first time in at least two decades.”

“People are looking for the company to do something,” Standard & Poor’s equity analyst Herman Saftlas said. “It’s going to take more than just business as usual to right-size this ship and get it back into growth mode. Teva probably realizes now that a little more drastic steps have to be taken. It is possible that they could unveil a deal with somebody.”

Teva officials declined comment on speculation about a merger or acquisition.

Meanwhile, recently-ousted president and CEO Jeremy Levin has begun contemplating his career options.

“I’m proud of my previous job at Teva…. As for myself, I immigrated and I’m now unemployed, so if you have some interesting offers…” he remarked in the keynote address at the graduation ceremony of Tel Aviv University’s Kellogg-Recanati School of Business MBA program on Tuesday.

“I intend to devote my time in the short term to get to know Israel and Israelis, and to see everything that this country has to offer. There is special warmth and love in Israel, and I’m proud to be an Israeli.” Levin advised the new graduates, “Follow your hearts, dream big, learn from mistakes and appreciate the loss in order to learn from it.”

Earlier in the week, Teva announced a cut of 10 percent of its legal staff as part of a streamlining plan.

This article appeared in print on page 6 of the November 21st, 2013 edition of Hamodia.