The spin-off plan as part of Elbit’s reorganisation will be raised as the central issue at meetings of the company’s shareowners and creditors, scheduled for November 6. Elbit is today divulging further details of its spin-off plan, drafted following a sharp drop in profits.
In the framework of the plan, Elbit will establish two new companies. To these it will transfer its activity in the field of medical imaging systems and defense systems. The shares of the two new companies will be traded on the TASE and in New York. Elbit itself will relinquish its civilian businesses which until now did not live up to the company’s expectations.
The civilian division controlled by Elbit includes the company’s television factory Fibronics, which manufactures data telecommunications products, and EVS, issued recently on Wall Street and dealing in the development of sophisticated vision systems for industry, and other projects in the field of video and communications.
This division closed the first half of ‘96 with revenues of $60 million and a loss of $6 million, a significant part of which is attributed to the company’s television factory in Migdal Ha’emek.
Elbit’s main activity at present, in the field of medical imaging, is carried out by Elbit Ultrasound (formerly Diasonics, acquired at the end of ‘94) and Elscint, whose shares are traded in New York. This activity will be transferred to a new company to be established, “Elbit Medical Imaging” (EMI). This division, which will also include Elbit’s dealings in the field of medical centers abroad, contributed 56% of the company’s revenues in the first half of ‘96 and closed the period with a slight decrease in profits, to $3.3 million.
Elbit’s dealings in the field of defense, its traditional field, include weapons upgrading and EFW, which operates in the US. These business dealings will be centralised in a second new company, Elbit Systems (ESL). This division, whose portion in Elbit’s overall business dealings has been significantly smaller in recent years, contributed $133 million in revenues in the first half of ‘96 and a profit of $7.7 million.
The spin-off plan will therefore turn Elbit into three separate companies, all of which will be controlled by the present controlling shareholder, Elron.
The issue of senior officeholders in Elbit rides on the spin-off plan. Elbit is likely to allocate options in the three companies to them. Emmanuel Gill, Elbit CEO, Igal Baruchi, General Manager, and Yosef Ackerman, General Manager of the Defense Division, will receive options to acquire shares in Elbit, ESL and EMI.
Nonetheless, sources at Elbit stress that it is not at all certain that the three companies’ accumulated share price after the spin-off, will be equal to or higher than the Elbit share price on the eve of the spin-off.