The negotiations in recent months between Koor Industries (NYSE: KOR) and Elbit Systems (Nasdaq: ESLTF) for the sale of 30% of Elisra Electronic Systems have failed, and the shares were sold to Israel Aircraft Industries (IAI) subsidiary Elta Electronic Industries. Elbit Systems today announced, "The parties have not managed to reach agreement, and the talks with Koor have been discontinued."
Elta is Elisra's main competitor in electronic warfare systems, both in Israel and internationally, and the Antitrust Authority director general may therefore oppose the acquisition. Sources close to Elisra claimed in recent months that selling the company shares to its main competitor goes against Israel's trend towards privatization. The sources said, "Elta's partnership in Elisra amounts to nationalization of electronic warfare in Israel."
Last week, Koor and Elta signed an agreement in principle that included a commitment for the sale of 30% of Elisra at a company value of $330 million. Elta was also granted an option to acquire another 8% of Elisra for two years or until Elisra's planned issue. The option is at the price of the current deal.
Koor president and Elisra chairman Danny Biran said today that the deal was subject to approval from the government and the Antitrust Authority director general. Koor is expected to post a $60 million capital gain if the sale goes through. Biran added, "The advantages of Elta's partnership in Elisra are obvious."
Published by Globes [online] - www.globes.co.il - on June 9, 2002