By Nicholas Casey And Orr Hirschauge
TEL AVIV-- Teva Pharmaceutical Industries Ltd.'s $40 billion
offer for Mylan NV marks corporate Israel's biggest foreign foray
and caps years of hand-wringing about the inability of the country
to nurture big multinationals, analysts say.
Israel, the self-proclaimed "Start-up Nation," has built a
reputation as a hub of tech and biotech companies, quickly
assembled and sold to foreign firms looking to grow. Recent success
stories have included Annapurna Labs Ltd., sold to Amazon.com Inc.,
and CyActive Ltd., sold to eBay Inc.'s PayPal, this year.
Less noticed, however, are the public companies in Israel that
have been hungry for foreign acquisitions. Teva alone has made more
than a dozen large deals in recent years, including a $3.5 billion
pending deal for U.S.-based Auspex Pharmaceuticals Inc. announced
on March 30.
"I would say there's been quite a trend over here in Israel for
companies to acquire," said Jonathan Kreizman, a pharmaceuticals
analyst at Clal Finance a nonbank financial group in Israel. Just
as Israel's small size has made it a good incubator for small
firms, it means mature companies must go looking abroad for sources
of growth, Mr. Kreizman said.
Teva's precursor, a drug wholesaler called Salomon, Levin and
Elstein, was founded in Jerusalem in 1901.
It became known as Teva--a Hebrew name meaning "Nature"--in the
1930s not long before the modern state of Israel was
established.
Teva is a source of pride in Israel today, now the largest
company by market capitalization on the Tel Aviv Stock Exchange and
a big employer domestically, with 7,000 employees in Israel and
more than 40,000 employees world-wide.
"By all parameters Teva is the biggest Israel-based commercial
company. It also has a symbolic importance showing that a company
that has its headquarters in Israel and most of its research and
development done in the country can become a dominant global player
in its field," said Israeli economist Manuel Trajtenberg, a former
head of the Israeli National Economic Council, and a current member
of the Israeli parliament.
Ronny Gal, an analyst at Sanford Bernstein, said recent public
offerings could mean that more Israeli companies may follow in
Teva's footsteps. "The fact that many Israeli companies have gone
public in the last two years does suggest that more Israeli
companies will become acquirers," he said.
Mr. Gal said one problem in the past was that Israel was thin on
seasoned managers needed to shepherd acquisitions. But that is
changing, he said, "Now you see serious managers in Israel that are
much more confident and have much more international
experience."
Write to Nicholas Casey at nicholas.casey@wsj.com and Orr
Hirschauge at Orr.Hirschauge@wsj.com
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