Elbit Systems to provide UAVs for UK Watchkeeper program

The contract is worth hundreds of millions of dollars for Elbit Systems, which is in a consortium with Thales UK and Boeing.

The UK Ministry of Defence announced today that it had selected Thales UK, Boeing (NYSE:BA) and Elbit Systems (Nasdaq:ESLT; TASE:ESLT) to supply unmanned aerial vehicles (UAVs) for the British Army Watchkeeper ISTAR (intelligence, surveillance, target acquisition and reconnaissance) program. The tender is worth an estimated $1.5 billion.

Following the initial report of the announcement by "Globes" Internet edition this morning, Elbit Systems' share price rose 4.5% on the Tel Aviv Stock Exchange (TASE) in heavy trading. Two weeks ago, Tadiran Communications (TASE:TDCM) announced an agreement to buy Elron Electronic Industries' (Nasdaq:ELRN; TASE:ELRN) stake in Elbit Systems, but Micahel Federemann is considering exercising his first refusal rights to the shares.

Defense industry sources believe that Elbit Systems' share in the UK program is likely to be large, since it owns most of the avionics and payload technologies.

The Watchkeeper tender is the largest UAV tender published in the world recently. Defense industry sources told "Globes" that Thales UK would establish a plant in the UK to assemble Elbit Systems' Hermes 180 and Hermes 450 UAVs, which will be delivered to the British Army in 2006-09.

The Hermes 180 has a maximum take-off weight of 200 kg, ten hours flight endurance, and a 150-km range. The Hermes 450 has a 450-kg take-off weight, can reach an altitude of 6,000 meters, a range of several hundred kilometers, and 20 hours flight endurance.

Published by Globes [online] - www.globes.co.il - on July 20, 2004

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