learning by example: teva pharmaceuticals’ acquisition of
TRANSCRIPT
Learning by Example: Teva Pharmaceuticals’ Acquisition of Actavis Generics
Yael Elbaz, Head of Teva Stock Plans Management, Teva Pharmaceuticals Patrick Stierli, Director Client Relationship Manager, Equatex AG
Svein Petter Undheim, Head of Financial Reporting Competence Center, Equatex AG
Table of Contents
• Introduction Teva• The Acquisition• Timeline • Goals and Objectives • Challenges • Solutions• Lessons learned • Q & A Session
Introduction – About Teva • Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA), headquartered in Israel is
a leading global pharmaceutical company that delivers high-quality, patient-centric healthcare solutions used by approximately 200 million patients in 100 markets every day
• Teva is the world’s largest generic medicines producer, leveraging its portfolio of more than 1,800 molecules to produce a wide range of generic products in nearly every therapeutic area
• Teva's specialty medicines business, which is focused on delivering innovative solutions to patients and providers via medicines, devices and services in key regions and markets around the world, includes Teva's core therapeutic areas of CNS (with a strong emphasis on MS, neurodegenerative disorders, and pain care including migraine) and respiratory medicines (with a focus on asthma and chronic obstructive pulmonary disease). Teva also has specialty products in oncology, women’s health and selected other areas
• Teva has ~60,000 employees in 65 countries with net revenues in 2016 were $21.9 billion
Why Actavis Acquisition?Combining Two of the Best Generics Businesses in Global Pharma Industry• Strongly reinforces Teva's strategy, accelerates creation of its new business
model • Continued improvement in operating profitability• More focus on portfolio management• Increased sales force effectiveness and focus in key markets• $1.35 billion cumulative net cost savings from 2014 – 2016E from ongoing
cost reduction initiatives at Teva• Multiple growth drivers at various stages of development • Overall product portfolio that leads the industry in terms of differentiation and
durability• Expect to achieve cost synergies and tax savings of approximately
$1.4 billion annually
Acquisition in Light of Equity• Integration of two thousand new plan participants from Actavis into Teva equity
incentive scheme and systems • Implementation of new plan countries including its tax, legal and operational
requirements• Leaver rules of acquired company had to be integrated • The whole process had to be completed in a few days in order to give a great
participant experience and best care in onboarding new employees • Clear communication and new platform training • Grant conversion process had to be straightforward in order to make sure the
optionees of acquired company will be happy with new grants and overall process• Strong partnership and collaboration key factor contribution to a successful and
remarkably efficient M&A transformation of share plans from one company and culture to the other
•
Timeline
Day 3 – 5 Conversion set and approved by CFO HR to calculate new grants and to provide it by agreed template Annual grant data if grant is immediate
Day 5 – 7 Transfer all test environment into live platform Special award types and termination cases final checkout New grants to be loaded and reviewed
Day 7 – 10 Platform to be open for employees to sign their agreements and review
their rollover grants Email to be sent to all optionees including full system education and call
center details
Day 0 – 2
Conversion rollout by accounting Welcome email to ACT optionees:
1) Conversion files2) Basic information re platform3) Time line4) FAQs
Goals and Objectives
• Fast and clean process• Transparent and clear communication to all stakeholder groups
• Complete training plan on new equity platform• New set of leaver rules • Easy grant conversion process • Full quantities validation• Special accounting policy setting• Tight go-live deliverables timeline (see next slide) • Meet timeline objectives
Challenges Equity Conversion
Timeline• Timeline was unknown – closing was pending for few month over approval from the
FTC and other regulatory authorities• Go-Live had to be ready for an immediate action, not knowing the final
employee quantities and the final grant quantities
Actavis transformation into Teva Grant
Teva doesn’t grant RSRS, RSUs into RSUsPSUs are only for executivesPSUs into RSUs
SOP into SOPsTeva doesn’t grant ISOsISOs into SOPs
Grant transformation issues:Unknown conversion ratio between existing grant and converted grant until Day 1; +3 days after
Challenges Leaver and Stakeholder • As part of the agreements all employees from acquired company had to get the better
termination rules out of the plans• Review of different plans comparing to Teva plan rules• Newly created leaver rules were set to use the better of each converted grant
Involved stakeholder groups • Former Actavis employees and new Teva plan participants• Comp & Benefits• Legal team and WTW – Willis Tower Watson • Finance• Tax team and EY• SOX team• Treasury• Compliance (Tapestry)• Administration and Accounting (Equatex AG) • Internal communications
Challenges Technology/Communication Technology • Data collection and quality reviews on grant types and quantities• Creation of new payrolls and respective data set, including tax and compliance review
to non existing countries • Financial reports build up• Award agreement set up – 1 for each grant type (SOP, RSUs, PSUs converted to RSUs
and cash grants)• Dynamic set up on administration platform
Internal Communication • Full internal communication to HR managers and employees• Interactive dashboard• Contact Center training on high level merger summary and award conversion
details pre go live• Distribution login details (as part of internal communication)
Solutions Test environment• Set up optionee structure and leaver rule • Smart build up of award agreement:
o Pre conversion quantitieso Post conversion quantities (including ratio explanation)o Grant and leaver rules
New participant communication• Presentations to HR and Comp& Ben managers globally• Welcome day 1 informative email• Full communication including training material and on-line training
sessions• Dynamic online award agreement and conversion (‘old’ into new
plan holdings)
CommunicationExamples of plan participant communications materials
Solutions cont. Provider cooperation and platform flexibility• Up-to-date statistics access • Implementation new accounting system • Workshops with multiple key stakeholders to verify accounting and
financial reporting requirements of converted instruments• Specific training of contact center agents • Consistent branding of communications package and the system • Full set up had begun on day 1(a day after closing) and 5 days
later, platform was up and running including all the employees data, grants and termination new structure
Solutions Financial Reporting
• Expense reporting• Diluted EPS• DTA • Disclosure
Lessons Learned • Not to underestimate management and collection of data from a new
company; data quality and data accuracy• Resource planning vs. timeline; different company cultures and availability
of stakeholders across time zones• Commitment and understanding of line managers’ role for participant
satisfaction • Seamless coordination and buy-in of stakeholders• Prepare and ensure awareness of required online legal documents and
forms for new participants; in particular to brief contact center agents • Process control and management of outstanding award agreements and
undocumented participants• Simplicity in content and language of communications• Share information, involve finance and accounting teams early
Q&A Session
Thank You Thank you for attending GEO’s 18th
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