Defense contractor Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) today fired the first shot in its attempt to take over privately-owned defense company Mikal Technologies (1999) Ltd., which "Globes" first reported several weeks ago. Today, Elbit Systems published an offer to purchase the public's holding in ITL Optronics Ltd. (TASE: ITL), controlled by Mikal, at a premium of 15% on yesterday's closing price, reflecting a company value of $19 million.
In contrast to previous acquisitions by Elbit Systems, in which it reached deals with the target companies' controlling shareholders before making an offer to purchase the public holdings, the company has reversed the steps in the case of ITL. The reason is apparently because Elbit Systems is worried that an announcement of a deal to acquire Mikal would raise the price it would have to pay for ITL.
Elbit Systems subsidiary Elbit Security Systems Ltd. (Elsec) is offering NIS 5.85 per share for the public's 15.19% holding in ITL, for a total outlay of NIS 11 million. Elbit Systems said that ITL's average share price over the past 12 months was NIS 6.64, 13.5% higher than the price in the offer to purchase.
ITL is concurrently in talks to sell 57% of the company to US electro-optical equipment maker Fraser Volpe LLC, reportedly at a company value of $16-18 million. The market apparently believes that Elbit Systems will raise its offer for ITL, as the latter's share price rose 16.6% today to NIS 5.93, giving a market cap of NIS 72 million.
The offer to purchase is valid through August 4. Elbit Systems says that if the minimum response to the offer is not obtained, the offer to purchase will not go ahead.
Mikal directly owns 20.4% of ITL, and Mikal's wholly-owned subsidiary Soltam Systems Ltd. owns 64.45%. Elbit Systems owns 19.35% of Mikal through a wholly-owned subsidiary.
Elbit Systems' share price fell 0.2% at the opening on Nasdaq today to $50.68, giving a market cap of $2.16 billion. The share price rose 0.2% on the TASE today to NIS 195.50.
Published by Globes [online], Israel business news - www.globes-online.com - on July 15, 2010
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