Teva Pharmaceutical Industries Ltd. (TEVA:US) is likely to name board member Erez Vigodman as chief executive officer this month, and an activist shareholder is urging investors to support the appointment, according to two people with knowledge of the matter.
Vigodman, the CEO of generic agrochemicals maker Makhteshim-Agan Industries Ltd., is the board’s choice for the job, though directors haven’t voted on the appointment yet, said the people, who asked not to be identified because the search is confidential. CEO Jeremy Levin was ousted in October amid a conflict with the board.
“As critical as I am of Teva’s board, I think this time they got it right,” Benny Landa, a shareholder who sought to unite institutional investors in pushing for governance changes after Levin’s ouster, wrote in a letter to shareholders yesterday that was obtained by Bloomberg News. “Erez Vigodman is made of the right stuff to succeed. He is a strategic thinker with excellent managerial skills. He is a straight shooter whom the Street will learn to trust.”
Vigodman, 54, orchestrated a turnaround at Makhteshim-Agan in the past four years. He previously ran food company Strauss Group Ltd., where he oversaw a global expansion that included buying coffee makers in Brazil and a prepared-salad company in the U.S. Now he will get a shot at reviving Israel’s biggest company as its shares trade near a six-year low and talk builds of a possible break-up.
Teva is streamlining global operations, eliminating about 10 percent of its workforce in a bid to boost earnings as multiple sclerosis-treatment Copaxone, which accounts for more than 50 percent of profit, faces possible generic competition this year.
Vigodman would cease to be a director of the Petach Tikva, Israel-based company, and interim CEO Eyal Desheh probably would return to being chief financial officer, one of the people said.
While Vigodman is a seasoned Israeli executive who knows the Teva board, Levin was a South Africa-born citizen of the U.K. and the U.S. who had previously overseen dealmaking at Bristol-Myers Squibb Co. He clashed with directors, almost all of them Israelis, as he sought to restructure the world’s largest generic-drug maker.
Vigodman will need to win over investors skeptical of his lack of drug experience. The Landa letter signals he has secured support from at least one key investor.
After Levin’s departure, Landa urged institutional investors to call for a special meeting to propose governance changes. He sought a reduction in the size of the 16-member board, the addition of pharmaceutical industry veterans as directors and changes to the company’s articles of association to make it easier to oust directors and to amend the articles, according to letters he sent to investors that were reviewed by Bloomberg.
Teva rose 0.3 percent to 139.80 shekels at 10:25 a.m. in Tel Aviv. The company’s American depositary receipts have declined 38 percent from their peak (TEVA:US) in 2010.
A spokesman for Teva said via e-mail the company doesn’t comment on market rumors. Landa declined to comment through a spokesman. A spokesman for Vigodman declined to comment. Globes, an Israeli newspaper, reported last month that Vigodman was the top candidate for the job.
Landa met twice with Teva Vice Chairman Amir Elstein in the past three months. Elstein “shares our view that it is far preferable that those actions be initiated by Teva’s own board rather than be imposed by shareholders,” Landa told investors in a letter dated Dec. 23. Landa founded Indigo NV, a maker of digital-printing equipment, and sold it to Hewlett-Packard Co. in 2002 in a deal valued at as much as $882 million when it was announced.
At Elstein’s suggestion, Landa and Vigodman met recently to discuss Teva, according to yesterday’s letter.
Teva plans to announce its own governance proposals in the coming months, a person with knowledge of the matter said. While Teva is likely to support measures that would downsize the board and increase members with global pharma experience, the company is less likely to change its supermajority rules, the person said.
“The ball is now in the Teva board’s court,” Landa said in a letter last night. “If Amir Elstein can deliver as assured, and the board this month announces its intent to live up to our understandings, that will be good news for all. If not, we will, with regret, have to go back to Plan A.”
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