Defense electronics company Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) will invest $18 million for approximately 19% of the shares in defense products developer Mikal Ltd.
As part of the agreement, Elbit Systems also will be granted the option to purchase all of the remaining shares of Mikal from its shareholders.
The Mikal Group was founded in 1993 by Abraham (Miko) Gilat. Mikal has three main branches - artillery developer Soltam Systems Ltd., armored fighting vehicles firm Symar Ltd., and ITL Optronics Ltd. (TASE: ITL).
Several weeks ago, Elbit was rumored to be buying Mikal unit Soltam Systems in a deal estimated at tens of millions of dollars. Now it appears that Elbit is buying a stake in Soltam's parent company.
Mikal owns companies in Israel and around the world.
In the first stage of the transaction, Elbit Systems will transfer $18 million to Mikal as a loan. After receiving authorization from the Israeli Antitrust Authority and subject to such authorization, the loan will be converted to an equity investment, and Mikal will issue approximately 19% of its shares to Elbit Systems. Elbit will then be granted the option to purchase the remaining shares of Mikal from the other shareholders, in the course of 2011, for a purchase price to be determined in accordance with an independent external valuation.
Shares in Elbit closed on Friday at $60.30, near the top of its 52-week range of $35.60 - $62.78. Its market cap is $2.54 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on June 15, 2009
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