Thousands of job cuts are slated to hit Teva's home country of Israel on Thursday, reports say—and before they do, former chairman and interim CEO Yitzhak Peterburg is stepping aside.
The generics giant, which recently turned over the reins to new CEO Kåre Schultz, plans to cut loose at least 3,000 of its 7,000-strong Israeli workforce, local newspaper Globes reports, adding that the drugmaker will close down most of its Israeli production ops.
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Word from Teva that Peterburg would resign from its board, effective immediately, came on Tuesday with the restructuring looming. “He is a relatively known person in Israeli political circles and did not want to be associated/become the public face of the planned cuts,” Bernstein analyst Ronny Gal wrote to clients on Wednesday.
Teva, for its part, said in a regulatory filing that Peterburg’s decision to resign came “solely for personal reasons and does not involve any disagreement with the company. “
“The company thanks Dr. Peterburg for his years of dedicated service and wishes him well in his future endeavors," the 6-K says.
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Mass layoffs in Israel aren’t that easy to pull off, though, and Teva’s own have met with plenty of opposition in the past. Weeks before then-CEO Jeremy Levin departed in October of 2013, Israeli unions pledged a strike to protest 5,000 global Teva layoffs, and Teva’s worker representatives showed up at the company's HQ in Petah Tikva.
And this time around, Teva staffers are already mobilizing, according to Globes. Several of Teva’s workers' committees have contacted Israel’s general federation of labor to mobilize against the layoffs and help employees out, and they’re thinking on a large scale. “We are demanding a response that will shake up the entire country. A strike at Teva won't affect the new CEO Kåre Schultz,” one senior worker committee rep told the newspaper.
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The way Bernstein’s Gal sees it, though, it’s “critical” for Teva—which is struggling under a mountain of debt in the wake of a disastrous $40.5 billion acquisition of Allergan’s generics unit—“to execute these cuts,” he wrote.
“We will judge the company in part on its ability to persevere through the local opposition,” he added.
Meanwhile, the company could unveil a structuring plan featuring as many as 10,000 job cuts worldwide, Bloomberg reported earlier this week.