Investors are panic-buying Israeli generic drugmaker Teva Pharmaceutical after the new CEO announces restructuring plan that involves eliminating 25% of global workforce, suspending its dividend, and warns of “downward pressure on the top line.”
As WSJ reports, Teva Pharmaceutical is cutting more than 25% of its workforce, suspending its dividend, and closing factories and research facilities world-wide as it works to cut costs and pay down debt.
Teva, the world’s biggest seller of generic drugs, has suffered from declines in prices for its products in the U.S. and increased competition for its blockbuster multiple-sclerosis drug.
The two-year restructuring plan the company announced Thursday aims to cut $3 billion in costs by the end of 2019, out of an estimated $16.1 billion in 2017.
The dividend suspension impacts both its ordinary shares in Tel Aviv and American depositary receipts trading in New York.
Mr. Schultz, who was named as CEO in September and began serving in the role Nov. 1, inherited a business with falling profits, a huge debt pile and a collapsing share price.
“Making workforce reductions of this magnitude is difficult,” Mr. Schultz wrote in a memo to employees.
“However, there is no alternative to these drastic steps in the current situation.”
And investors love it!!!
Two words – “kitchen sink”
This post originally appeared on Zero Hedge