Aaron Frenkel continues to increase his holding in Israeli UAV company Aeronautics (TASE: ARCS). In the past few days, on the open market and in off-floor transactions, Frenkel has acquired a further 4% of the shares in the company, at an investment of some NIS 29 million, to reach a total stake of 24.6%.
Frenkel's most recent deals in Aeronautics shares were at an average price of NIS 13.15 per share, 6.6% higher than the share's closing price yesterday. The share price responded to today's report of Frenkel's purchases with a rise of 5%, which means the company's market cap has doubled within six weeks, to NIS 703 million.
Frenkel (61), whose main business activities are in real estate and aviation, started to amass Aeronautics shares in the last week of December, when he bought 5.5% of the company from The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) at NIS 8.5 per share, 25% more than the market price at the time. He bought further shares in the weeks that followed.
Aeronautics develops, manufactures and sells unmanned aerial vehicles, and electro-optic and communications systems. The company is controlled by the KCPS, Viola, and Bereshit investment funds. Other substantial holdings are in the hands of Menorah Mivtachim Holdings Ltd. (TASE: MORA) (9.4%) and Bank Leumi (TASE: LUMI) (5.3%).
Another reason for the rise in Aeronautics' share price is the announcement by Rafael Advanced Defense Systems Ltd. and Avihai Stolero of their intention to buy the company outright for NIS 850 million. Last August, they attempted to buy the company for just NIS 450 million.
Rafael and Stolero's improved offer is subject to a due diligence examination at the company and its subsidiaries. The deadline for completing negotiations is February 15, with an option to extend it by two weeks if due diligence is not completed in time.
Israel Aerospace Industries (IAI) also expressed interest in acquiring Aeronautics, and made an offer of NIS 600 million. Last week, IAI announced that it had decided to cease examining the possibility of investment in Aeronautics, but added that it "reserved the right to reexamine the deal in whole or in part in the future."
Aeronautics went public in the summer of 2017, through an offer for sale by the funds holding the company totaling NIS 400 million and the issue of new shares amounting to NIS 53 million to the lead underwriter, Leumi Partners. The company began to be traded at a market cap of over NIS 1 billion.
Between the time of the offering and Frenkel's first purchase of shares, Aeronautics' share price fell by more than 60%. Disappointing results were compounded by an affair in a foreign country that led Israel's Ministry of Defense to suspend the company's license to export its UAVs to that country. The license has since been restored.
Published by Globes, Israel business news - en.globes.co.il - on February 11, 2019
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