10-Q: Teva Pharmaceutical Industries to Terminate ADS Program

Teva Pharmaceutical Industries Limited announced amendments to its deposit agreement and the termination of its American Depositary Shares (ADS) program, with ordinary shares to be directly listed on the NYSE.

Summary

• Teva Pharmaceutical Industries Limited is amending its Second Amended and Restated Deposit Agreement, dated December 4, 2018, with Citibank, N.A., as Depositary.
• The company is terminating its American Depositary Shares (ADS) program, with the termination effective September 14, 2026.
• Following termination, outstanding ADSs will be automatically cancelled and exchanged for an equal number of ordinary shares.
• The ordinary shares will be listed on the New York Stock Exchange (NYSE) under the ticker symbol TEVA, replacing the ADSs.
• The ordinary shares will also continue to be listed on the Tel Aviv Stock Exchange (TASE) under the symbol TEVA.
• The company is transferring its share register maintenance to Equiniti Trust Company, LLC as the transfer agent.
• Holders of ADSs will become direct shareholders of Teva, holding ordinary shares instead of ADSs.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a neutral to slightly positive development, as it simplifies the company's structure and potentially improves investor access, though it requires action from existing ADS holders.

Positives

• Direct listing of ordinary shares on the NYSE may enhance liquidity and investor access.
• Streamlines corporate structure by eliminating the ADS program.
• Potential for increased investor engagement with direct share ownership.

Negatives

• Holders of ADSs will need to transition to holding ordinary shares, potentially involving administrative steps.
• The process of transitioning from ADSs to ordinary shares may cause temporary confusion or inconvenience for some investors.

Risks

• Potential for delays in the transition process due to intermediary actions (Depositary, Transfer Agent, DTC).
• Failure to obtain requisite NYSE approval for the listing of ordinary shares.
• Inability to establish and maintain the contemplated structure with the Transfer Agent and DTC could impact eligibility for clearance and custody.

Future Outlook

The company expects the termination of the ADS program and direct listing of ordinary shares on the NYSE to be completed by September 14, 2026, subject to regulatory approvals and intermediary processes.

Management Comments

• The company has informed Citibank, N.A. (the Depositary) of its intent to list its Ordinary Shares underlying the ADSs directly on the NYSE and on July 28, 2026, instructed the Depositary to terminate our existing ADS program.
• Following the termination of our ADS Program, the holders of ADSs will continue to be equity holders in the Company, but will hold their equity interests in the form of Ordinary Shares rather than as ADSs through the Depositary.
• The Ordinary Shares will be listed on the NYSE in lieu of the ADSs and trade under the same symbol as the ADSs, TEVA.
• The Ordinary Shares will also continue to be listed on the Tel Aviv Stock Exchange (TASE) under the same symbol TEVA.
• The implementation of the mandatory exchange and the delivery and listing of the Ordinary Shares on the NYSE remain at the discretion of our management, subject to compliance with applicable law and the rules of the NYSE and the ability of certain intermediaries to implement the contemplated structure for listing the Ordinary Shares on the NYSE.

Industry Context

StockSavvy.ai notes that the move by Teva to terminate its ADS program and directly list its ordinary shares on the NYSE is a strategic shift often seen in companies seeking greater operational efficiency and direct investor engagement, potentially reducing administrative costs associated with ADR programs.

Corporate Governance

Stakeholder Impact

• ADS Holders: Will transition from holding ADSs to holding ordinary shares directly, requiring potential administrative steps and understanding new shareholding procedures.
• Company: Simplifies corporate structure, potentially reducing administrative costs and improving direct investor relations.
• Stock Exchange (NYSE): Will list Teva's ordinary shares, increasing the number of listed securities.
• Depositary (Citibank, N.A.) and Transfer Agent (Equiniti Trust Company, LLC): Will manage the transition process and ongoing share registration.

Next Steps

• Depositary to file Amendment No. 1 to the Second Amended and Restated Deposit Agreement and a form of ADR with the SEC.
• Depositary to notify ADS holders of the termination of the ADS Program.
• Equiniti Trust Company, LLC to become the transfer agent.
• Holders of ADSs to receive ordinary shares in exchange for their ADSs.
• Ordinary shares to be listed on the NYSE under the ticker TEVA.

Key Dates

Keywords

Teva Pharmaceutical Industries, ADS Program Termination, American Depositary Shares, Ordinary Shares Listing, NYSE Listing, Deposit Agreement Amendment, Citibank N.A., Equiniti Trust Company