- Rimsa purchased last year for $2.3 billion on expansion plan
- Teva claims it was misled by Rimsa and plans to fight lawsuit
The former owners of a Mexican drugmaker purchased by Teva Pharmaceutical Industries Ltd. last year for $2.3 billion say the Israel-based company is suffering “buyer’s remorse” and looking to get out of the deal.
Teva agreed to buy Representaciones e Investigaciones Medicas SA, known as Rimsa, to expand in emerging markets. On Tuesday, the sons of the company’s founder sued Teva in New York state court alleging it made false accusations of fraud in order to void the purchase.
The former owners, Fernando Espinosa Abdala and Leopoldo de Jesus Espinosa Abdala, say Teva falsely accused them of failing to disclose the differences between manufacturing processes and descriptions in product registrations filed with regulators. In reality, the brothers say in the complaint, Teva didn’t understand Rimsa or the Mexican market and is now trying to undo the transaction "by any desperate measure" after destroying the Rimsa companies with firings and manufacturing shutdowns.
"Shortly after the acquisition, Teva concluded that it had substantially overpaid for the Rimsa companies," the former owners said. It “now wants its money back because otherwise Teva knows that its management will be held accountable by its shareholders.”
Teva said after the deal closed it became aware of violations perpetrated by the sellers.
The company is working with Rimsa employees and Mexican regulators to uncover and address those issues while protecting the needs and safety of patients, Teva said in an e-mailed statement.
“Teva intends to respond strongly to the lawsuit and will be seeking a variety of remedies for fraud and breach of contract,” the company said. “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.”
The case is Espinosa Abdala v. Lemery SA de CV, 654824/2016, New York State Supreme Court, New York County (Manhattan).