Sources inform "Globes" that Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) will shortly take over Mikal Group for $100-150 million. The acquisition will be by way of the exercise of an option given to Elbit in an agreement for investment in Mikal signed in June last year, under which Elbit lent Mikal $18 million, later converted to a 19% stake in the company.
Mikal holds several defense companies, the outstanding one being Soltam Systems Ltd., which manufactures artillery. Other significant companies in the group are ITL Optronics Ltd. (TASE: ITL) and Saymar Ltd., which produces vehicle armor.
Elbit Systems said in response, "As a public company, Elbit Systems reports its business measures when it has something to report about."
A major problem that Elbit Systems will have to deal with when the deal is closed is what to do with Soltam's employees. Soltam currently has 250 employees, most of whom are elderly and unionized with a collective labor contract. Conversely, Elbit Systems' employees work under personal contracts. Elbit Systems will reportedly agree to employ Soltam's employees for at least one year, after which it will have to decide whether to reach a retirement deal with the workers committee, or continue their employment under a different format.
Elbit Systems' share price rose 0.7% on Nasdaq yesterday to $52.36, giving a market cap of $2.23 billion, and rose 1.3% in morning trading on the TASE today to NIS 198.10.
Published by Globes [online], Israel business news - www.globes-online.com - on June 27, 2010
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