Sources inform ''Globes'' that US company DRS Technologies Inc. (NYSE:DRS) is in preliminary negotiations to acquire 25% of Star Night Technologies Ltd. (TASE:STNT), a maker of night vision equipment. DRS, a supplier of electronic defense systems, services, and support to military forces, intelligence agencies, and prime contractors worldwide, has a market cap of $1.8 billion. The company had $1.7 billion in sales between March 2005 and March 2006, of which $300 million originated from StarNight.
Star Night controlling shareholder and chairman Mordechai Saliman declined to comment on the report.
In a separate development, Star Night announced that sub-subsidiary Radom Aviation Systems Ltd. received an NIS 11 million order from an African country to upgrade helicopters. The company said work on the order was due to be completed by the end of 2007. Star Night’s consolidated orders backlog for 2006-07 is now NIS 60 million, including the latest order for Radom.
Star Night acquired 65% of Radom in November 2005 from private investors at a company value of NIS 4 million. As part of the restructuring now underway at Star Night, Saliman plans to acquire Magam Investments Ltd. (TASE:MGAM). The Israel Securities Authority is due to shortly approve the transaction.
Under an agreement between Saliman and Ronen Bechor and Udi Frumkin, who control 88% of Magam through Eliram Investments Ltd., Star Night will acquire 51% of Magam Investments and 51% of its subsidiary Magam Safety Ltd. for NIS 10.5 million each. Magam Safety manufactures parachutes, and textile and rubber air and sea rescue equipment, and other products.
Under the restructuring of Star Night, Magam Investments will take over Star Night’s subsidiaries New Noga Light Ltd., a manufacturer of night vision equipment; and Night Light Technologies Ltd., a manufacturer of night vision systems components. In exchange, Star Night will receive an additional 25% of Magam Investments, giving it an 85% stake in the company.
In June 2006, Radom signed a NIS 5.5 million contract to deliver night vision equipment to a French defense contractor. Under Star Night’s restructuring, Radom will become a sister company of New Noga Light under Magam Investments.
StarNight will become the parent holding company of Magam Investments, which will handle the group’s business. The Magam deal replaces Star Night’s failed attempt to acquire Aryt Industries Ltd. (TASE: ARYT), one of whose subsidiaries manufactures electronic fuses for ordnance and other products, in order to combine it with Star Night’s defense activity.
Star Night has a market cap of NIS 45.1 million. The company posted NIS 6.9 million revenue for the first quarter of 2006, 25% more than for the corresponding quarter of 2005. The company posted a net loss of NIS 500,000 for the first quarter, compared with a net profit of NIS 380,000 for the corresponding quarter. StarNight had NIS 14.5 million in shareholders’ equity at the end of the first quarter, 21% of its balance sheet total.
Magam Investments posted a loss of NIS 2 million on NIS 27 million revenue for the first quarter. If the merger goes ahead, Saliman predicts that the group will post NIS 130 million revenue for 2006.
Published by Globes [online], Israel business news - www.globes.co.il - on July 10, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006