Flextronics drops out of IMI privatization race

Israel Military Industries

Elbit Systems is now the only remaining bidder for the acquisition of Israel Military Industries.

Invictus, a subsidiary of US company Flextronics, today notified the Government Companies Authority that it was withdrawing from the tender for the acquisition of Israel Military Industries Ltd. (IMI), sources inform "Globes."

Together with Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), controlled by businessman Michael Federmann, Invictus last week reached the last hurdle in the procedure for acquiring IMI.

Sources involved in the tender for the sale of IMI told "Globes" that Flextronics' decision to withdraw from the race was a result of "disinformation and slander disseminated in recent weeks by parties with strong interests involved in the IMI privatization process."

Invictus's withdrawal from the tender was decided in the US during the past 24 hours, after the company submitted the tender documents for the IMI acquisition to the Government Companies Authority on Tuesday, together with Elbit Systems. The two companies were slated to submit their price bids to the Government Companies Authority in 10 days, as well as making a NIS 35 million deposit.

The minimum price set by the Government Companies Authority is NIS 1.1 billion, following two valuations for IMI from external companies commissioned by the Government Companies Authority. In a conversation with "Globes," sources involved in the process expressed deep concern that in the new situation that has emerged, IMI could not be sold at the price set, and the state would have to sell it below the minimum price.

The Government Companies Authority tenders committee is expected to discuss the future of the IMI privatization process on Sunday in the light of Invictus's withdrawal. This withdrawal in effect leaves Elbit Systems as the sole bidder for the acquisition of IMI. The future actions of businessmen Samy Katsav and Meir Shamir are unclear. On the hand, they notified the TASE last week that they had decided to withdraw from the tender. On the other hand, they have given no official notice to the Government Companies Authority. At the start of the IMI sale procedure, 10 groups expressed interest. Some of these withdrew during the procedure, others withdrew officially, and other simply dropped it, after apparently losing interest.

"The US investors do not like proceedings like those we have seen in recent days. At a certain point, it was already clear that this witch hunt would have a bad effect on competition," a senior source involved in the IMI privatization procedure said. In recent days, the State Controller began a comprehensive investigation of the allegations concerning bias by parties in the Ministries of Finance and Defense in the tender for the acquisition of IMI.

Commenting on these developments, a Ministry of Finance source said, "We are determined to continue the privatization process, come what may. The alternative will be more expensive for the Israeli taxpayer. Privatization is designed to save the state treasury hundreds of millions of shekels a year."

Published by Globes [online], Israel business news - www.globes-online.com - on January 14, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Israel Military Industries
Israel Military Industries
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