Minister of Defense Naftali Bennett is speeding up procedures for the Initial Public Offering (IPO) of 25% of the shares of Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1). Sources inform "Globes" that Bennett's decision came after several weeks of consultations with those involved in the process including the head of the Government Companies Authority Yaakov Kvint, Ministry of Defense director general General (res.) Udi Adam and IAI chairman harel locker.
According to sources close to the matter, Bennett was impressed by the support shown by the three men for the IPO and instructed senior officials in the Ministry of Defense to work towards the immediate promotion of the matter. Benettt is also determined to get cabinet approval for the plan as soon as possible. Officials in Bennett's office are convinced that it will be possible to float a minority stake in IAI even though there is only a transition government.
To speed up the IPO, professionals in the defense industry are seeking and forming a mechanism that will allow IAI to reveal its activities to shareholders while protecting the State's security interests. In the past, the Director of Security of the Ministry of Defense has expressed reservations about an IAI IPO because security secrets might be revealed.
As part of his examination of IAI's IPO, Bennett looked into other proposals such as a merger between IAI and Rafael Advanced Defense Systems Ltd., the sale of a small part of IAI's shares to a private strategic investor, a private placement with institutional investors or spinning off one of IAI's factories and selling it as a new company.
But after considering all the options, Bennett concluded that selling a minority IAI stake in an IPO was the most advantageous and had the most significant economic potential and would best equip IAI to cope with a fast developing and competitive market and also help it expand and attract a quality workforce by offering stock options.
Proponents of the IPO plan say it well help the company become profitable and be able to channel more money into R&D. Plans for IAI's IPO were boosted in recent months by the support from Prime Minister Benjamin Netanyahu who was acting defense minister before Bennett was given the portfolio.
However, IAI's workers committee headed by Yair Katz opposes the plan because it would not be enough to lead major change at the company and overcome government regulations.
Published by Globes, Israel business news - en.globes.co.il - on December 22, 2019
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