Two groups are emerging as the final competitors for building Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) giant complex in Ra'anana. One is Minrav Holdings Ltd. (TASE: MNRV) and the other consists of Electra Ltd. (TASE: ELTR) and Tidhar, which submitted a joint bid, sources inform "Globes."
As reported seven months ago in "Globes," Teva, which for a long time has been considering concentrating all its headquarters activity in a single site, decided to buy land in Ra'anana and build its company headquarters there.
After holding talks with Carasso Real Estate and Isras Investment Co. (TASE: ISRS), which own land in Petah Tikva, and Toyota importer George Horesh, who owns land in the northern Ra'anana industrial zone, Teva chose Ra'anana. The cost of building the 40,000-50,000-sq.m. complex is estimated at NIS 1 billion.
The move is planned to save Teva $1 million annually in future costs on renting properties. The developer in projects of this scope is usually the state, not a business company. This difficult large-scale project should make a significant contribution to the work backlog of the winning company.
At the end of the third quarter, Electra's work backlog totaled NIS 9.5 billion, and Minrav's was NIS 4.1 billion at the end of 2014. It is believed that the profit margin on the project will be similar to the prevailing low profit margin in the sector: 6-8% gross profit and 3-5% net profit.
Beyond the expected addition to the work backlog and profit, the project will gain the winning group prestige, and quite a few companies have competed for it. The media previously reported that Teva had demanded that the competitors include a foreign architect in designing its site, and that Minrav had hired super-architect Daniel Libeskind, who designed the Ground Zero project in New York, among other things. It was reported that Electra and Tidhar had hired Bjarke Ingels Group (BIG), a Danish architectural firm.
The 44-dunam (11-acre) site of Teva's planned new headquarters lies between Dafna, Hatidhar, and Dolev Sts. Horesh bought the 55-dunam (13.75-acre) site from Comverse Inc. (Nasdaq: CNSI) in 2010 for NIS 106 million, and later sold 11 dunam (2.75 acres) of it to SAP for NIS 40 million. It is believed that Teva paid Horesh NIS 160 million for the site.
Teva's headquarters is currently located on Basel St. in Petah Tikva, and the company also has several other sites in the city in Daniv Park and the Kodak Building, as well as activity in Netanya. Teva's goal is to transfer all its activity to the Ra'anana site, including Teva's international business activity, its management offices, R&D, and its ethical drug laboratories (generic business will remain in nearby Kfar Saba). Teva also has Israeli sites in Ramat Hovav, Jerusalem, Shoham, and Ashdod, and will continue to operate there. When construction of its new complex is completed, Teva will have 3,000 employees working there.
In response to the report, Teva said, "Teva is currently considering a number of bids for building the Teva campus. As the company announced several months ago, the campus will include the company's global headquarters in Israel. The company will set up an Israeli construction firm that will cooperate with an architectural firm with international experience.
"The campus, construction of which will be completed in four years, will consolidate the global headquarters activity currently spread over a large number of sites. The campus will give Teva employees an advanced and comfortable environment that will encourage the scientific, technological, and business excellence to which the company is committed, in addition to preserving the heritage of Teva and its founders.
"When the winning bid is chosen, the company will issue an orderly announcement."
Published by Globes [online], Israel business news - www.globes-online.com - on January 17, 2016
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