IAI seeks to thwart Aeronautics sale to Rafael

Aeronautics UAV Photo: PR

Israel Aerospace Industries is demanding that Israeli UAV company Aeronautics should be sold in an auction process.

Israel Aerospace Industries (IAI) is demanding that Aeronautics (TASE: ARCS) should disclose to it all the information that it presented in the negotiations on its sale to rival company Rafael Advanced Defense Systems Ltd., and even to open appropriate information rooms.

In a letter sent within the past few days to Aeronautics, which is on the point of being sold to Rafael and Avichai Stolero, IAI argues that Aeronautics should be sold in an auction process. Aeronautics reported yesterday that it had reached understandings with Rafael and Stolero on a sale of the company to them at a valuation of NIS 850 million, subject to a due diligence examination due to take one month.

Five months ago, Rafael and Stolero made an offer of NIS 430 million for Yavneh-based UAV company Aeronautics, which the Aeronautics board rejected as too low. IAI entered the picture more recently with its own attempt to buy Aeronautics from the Bereshit, KCPS and Viola funds and Aaron Frenkel, who bought a 5.5% stake in the company from The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) towards the end of last year and accumulated further shares on the market. IAI's intervention led to a doubling of Aeronautics' price, leading to criticism in government ministries that rivalry between two state-owned companies (Rafael and IAI) was diverting public money into the hands of private investors.

Defense industry sources said that Aeronautics held no added value for a company like IAI, which already has UAV and electro-optic systems businesses. The sources said that IAI was attempting to deny Rafael capabilities in UAVs and prevent it from becoming a competitor in that sector.

Published by Globes, Israel business news - en.globes.co.il - on January 14, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Aeronautics UAV Photo: PR
Aeronautics UAV Photo: PR
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