Teva, the largest company on the Israeli stock exchange, lost 34% of its share value over the last two trading days, after publishing bad earnings reports and announcing a reduction in forecasts, laying off 7,000 workers—including 350 in Israel—and closing down operations in 45 countries.
On Thursday, according to The Marker, the Teva share lost 18% on the Tel Aviv Stock Exchange, but its declines later worsened on Wall Street, where on Friday the stock continued to dive, returning to the Tel Aviv Stock Exchange on Sunday with a negative arbitrage gap of 18%. In fact, trading on the Tel Aviv Stock Exchange opened with a delay of several minutes on Sunday morning, due to the sharp fluctuations in the Teva share.
This collapse comes in the wake of the world’s biggest generic drugs maker attempt to dominate its market with a $40.5 billion acquisition of Allergan’s generics business last year. It was a bad call, and, according to the Economic Times, Teva’s stock is likely to be downgraded by S&P Global Ratings, which has already issued warning to this effect in July.
Teva representative David Lustig last week told the Knesset Finance Committee that “Teva is in the deepest and largest crisis in its history. We are reducing our workforce by 7,000 employees worldwide, in addition to the 5,000 employees we have eliminated in 2014-15.”
“In Israel, in recent years, in view of the difficulties, we have strengthened our activity and invested about $280 million in building new technologies,” Lustig told the committee, pointing out that “Teva’s largest R&D center is in Israel. Teva is a global Israeli company and we will continue to operate this way.”
Nevertheless, he said, “with all the difficulties we have had, and along with the actions we have taken to this day, we need to take another step that amounts to dismissing 350 employees in 2 sites. We are working to bolster the 6,500 [Israeli] workers in Teva and the 20,000 employees from external circuits.”
Finance Committee Chairman MK Moshe Gafni (United Torah Judaism) said his committee “expressed concern that due to the crisis Teva International has entered, there will be layoffs of workers in the flagship company of Israel’s industry.”
“We asked that the workers not be fired until after the holidays, and in the meantime a solution would be found for the meeting with the union committees,” Gafni added, stressing: “We asked that if there are layoffs they would be carried out only after discussions.”
