So much for the forceful response Teva promised when it claimed the former owners of Mexican generics buy Rimsa committed fraud.
After a heated legal battle and public exchange of accusations, the two sides have settled, leaving Teva with only an “insubstantial sum,” the exact amount of which is still unknown, Israeli newspaper Globes reported.
The lawsuit’s conclusion follows a New York judge's move last summer to dismiss Teva’s fraud claims surrounding Rimsa’s previous owners, brothers Fernando Espinosa Abdala and Leopoldo de Jesus Espinosa Abdala. But that decision didn’t completely reject the Israeli drugmaker’s breach-of-contract allegations, leaving the door open for Teva to score a few million dollars in compensation, Globes noted.
Now, however, Teva has confirmed that the episode is in the past, closing the door on one of two expensive and disastrous purchases from 2015.
With all the havoc and debt problems wreaked by Teva’s $40 billion Actavis generics buy—which the company inked shortly before the Rimsa deal—it was easy to overlook the latter debacle. But the purchase, meant to increase Teva’s emerging markets footprint and considered expensive at the time, has already resulted in writedowns of over $1 billion, and even more could be on the horizon, according to Globes.
The Rimsa buyout turned sour in 2016, shortly after the $2.3 billion deal closed. That’s when Teva said it “became aware of violations perpetrated by the sellers” and accused Rimsa of concealing fraud violations and misleading its buyer.
Rimsa, for its part, saw things differently, and it pointed the finger at Teva for concocting false fraud claims that would help it squirm out of the deal. It chalked Teva’s actions up to “buyer’s remorse,” adding that the company didn’t understand the Mexican market—or what it was getting itself into—before it made its entry.
Teva “now wants its money back because otherwise Teva knows that its management will be held accountable by its shareholders,” it said that September.
Accountable it has been, but not just because of the M&A blip. Most of Teva’s key leaders have since turned over, with current chairman Sol Barer handing the reins to new CEO and Novo Nordisk veteran Kåre Schultz.