Turns out Teva didn’t quite know what it was getting itself into when it agreed to buy out Mexico’s Rimsa last year for $2.3 billion.
The Israeli generics giant is suffering “buyer’s remorse” and looking for a way out of the deal, Rimsa claims--and in a lawsuit filed Tuesday in New York state court, the sons of the buyout target’s founder alleged that Teva ($TEVA) concocted false accusations of fraud in order to find one, Bloomberg reports.
Fernando Espinosa Abdala and Leopoldo de Jesus Espinosa Abdala, Rimsa’s former owners, say the Petah Tivka-based drugamaker falsely accused them of failing to offer up the discrepancies between manufacturing processes and descriptions in product registrations filed with regulators.
But as they figure, Teva just didn’t understand Rimsa or the Mexican market--and now, after it’s already decimated Rimsa with layoffs and plant shutdowns, Teva is trying to void the transaction “by any desperate measure.”
"Shortly after the acquisition, Teva concluded that it had substantially overpaid for the Rimsa companies," they said, as quoted by the news service. It “now wants its money back because otherwise Teva knows that its management will be held accountable by its shareholders.”
Teva, though, sees things differently. After the deal closed this March, it says, it “became aware of violations perpetrated by the sellers.”
“Teva believes the facts will speak for themselves and will show that the sellers of Rimsa misled Teva, regulators, and the public and took active steps to conceal the violations that were committed ,” a spokeswoman told FiercePharma in a statement, noting that it “intends to respond strongly to the lawsuit and will be seeking a variety of remedies for fraud and breach of contract.”
Teva first sought out Rimsa as a platform for expansion in emerging markets, with CEO Erez Vigodman talking up Rimsa’s physician relationships and Mexican commercial presence.
"We will build on their brand reputation, successful sales force model, well-established commercial footprint and loyal customer base to introduce additional specialty and generic Teva medicines to patients in Mexico and across the region," Siggi Olafsson, chief of Teva's generics unit, said in a statement after the two parties inked their pact last October.
Even with the acquisition not going as planned, though, the generics king is feeling pretty good about the future of its knockoffs business. Last week, it assured investors it could put up 5% annual growth on the generics side, with 1,500 product launches per year feeding that expansion effort.
Special Reports: Top 20 generics companies by 2014 revenue - Teva
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