As part of the privatization agreement allowing Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) to buy Israel Military Industries Systems (IMI Systems) for NIS 1.8 billion, Elbit will be allowed to postpone vacating IMI's Ramat Hasharon plant by two years.
The terms of the original tender for the privatization of IMI called for the plant to be moved by 2022 to Ramat Beka in the Negev. However, the Ministry of Finance and Israel Land Authority (ILA) have now agreed that the land need not be vacated until December 31, 2023. "This is due to the delays in the privatization process and postponement of payments and fines accordingly."
Elbit Systems will also be required to vacate IMI's Tirat Hacarmel plant near Haifa within four years of the statutory approval for the land that IMI owns in Yokneam. Elbit Systems will receive Nis 200 million from the government after it fully vacates the Tirat Hacarmel plant. The land will be used for building apartments overlooking the Mediterranean coast.
When IMI Systems is fully merged with Elbit Systems, IMI's current activities will operate from three plants: new plants in Ramat Beka in the Negev, and Yokneam and Tziporit in the north.
Defense Minister Avigdor Liberman stressed the importance of the jobs in peripheral regions that Elbit Systems will create after merging with IMI. Minister of Finance Moshe Kahlon, on the other hand, emphasized the land that would be made available for building new homes in high demand areas.
However, with the delay in vacating Ramat Hasharon, it is unlikely that new jobs will be created in the Negev for some years to come. Furthermore, with the need to clean contamination from beneath the land in Ramat Hasharon, and the government insisting that developers will have to pay for it, it is unlikely that many homes will be built before 2030.
Some feel that the government has bent over backwards in providing easy terms and incentives for Elbit Systems to buy IMI. Moreover, a check with the Israel Antitrust Authority which is examining the acquisition of IMI by Elbit and its impact on Israel's defense sector, found that it has yet to submit its opinion to the Ministry of Finance's accountant general. State Comptroller Prof. Yosef Shapira is also said to be preparing a highly critical report on the privatization process.
The bottom line, according to one source, is that transparency has been sacrificed by the Ministry of Finance, which is eager to get shot of IMI, which is loss making and eating up billions of shekels of government funds.
Published by Globes [online], Israel business news - www.globes-online.com - on March 12, 2018
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