IAI, Elbit Systems win $200m Turkish UAV contract

The contract could reach $600 million. A signing ceremony is scheduled for the Turkish prime minister's Israel visit in May.

This afternoon, around web-posting, Israel Aircraft Industries (IAI) and Elbit Systems (Nasdaq: ESLT; TASE: ESLT) are due to sign a contract to supply unmanned aerial vehicles (UAVs) to the Turkish Army. Representatives of the two companies are at Turkey's Undersecretariat for Defense Industries (SSM) to sign the contract, worth an estimated $200 million.

This is likely to be the first part of a $600 million contract. A state-level signing is scheduled to take place during a visit to Israel by Turkish Prime Minister Recep Tayyip Erdogan early next month.

The highly unusual collaboration between IAI and Elbit Systems, normally fierce rivals for UAV tenders in Israel and around the world, was imposed by the Turks. Two years after publishing the tender, the SSM informed the Israeli participants, Elbit Systems COO Itzhak Dvir and IAI Malat general manager Yair Dubester, that it would discuss the tender with them only if they joined forces.

After exhausting negotiations between IAI and Elbit Systems' managements, an cooperation agreement was reached.

Turkey's Ministry of Defense stipulated that IAI would manufacture the UAVs fuselages, and Elbit Systems would provide the ground control stations. After a protracted tender process, the Turks chose the joint Israeli bid over the bids of the other participants: France's Sagem (Paris:SAGU), and General Atomics Aeronautical Systems Inc. of the US.

Published by Globes [online], Israel business news - www.globes.co.il - on April 18, 2005

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