Reports indicate that Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) is looking to sell its women’s health unit in a bid to reduce the amount of the debt that the pharmaceutical company holds. The reports claim that the Israel-based generics giant is seeking approximately $2 billion from the sale. Teva’s debt at the moment stands at $37 billion and the proceeds of the sale will only pay off a portion of it. In order to get a buyer who will also structure the sale, Teva has hired Morgan Stanley.
Share price tanks
Challenges for Teva have increased in the recent past and this has seen the share price of the generics giant fall by around 40%, hitting a 10-year low. The problems bedeviling the pharmaceutical firm have included having to pay over $500 million to the government of the United States over allegations that the company was involved in bribery.
Teva has also made acquisitions that have not turned out so well. This includes acquiring Actavis for approximately $40.5 billion which many stockholders did not agree with as they claimed the figure was too high. The acquisition has been blamed for being behind Teva’s big debt. Its timing was also unfortunate as it happened just when the prices of generics were on a downward trend.
Teva also sought to acquire Rimsa, a pharmaceutical firm based in Mexico though the matter ended in court as the two firms filed lawsuits accusing one another of committing fraud.
Stiff resistance
Though Teva has denied it, media reports have indicated that the company’s restructuring plans include laying off thousands of workers. But even if Teva goes ahead to lay off workers, it is likely to face stiff resistance from unions and politicians.
Four years ago, Jeremy Levin, the then chief executive officer had to abandon similar restructuring plans after unions and local politicians fiercely opposed his move. Levin was eventually ousted by members of Teva’s board of directors since they did not agree with his restructuring plans. Already, the union leader at the pharmaceutical company has warned that they will put up a similar fight if Teva announces layoffs.
On Friday shares of Teva Pharmaceutical Industries Ltd fell by 0.12% to close the day at $32.31.