Elul Group News Analysis - December 2011
General News Summary
Shalit Freed
Private Gilad Shalit, held by Hamas since he was kidnapped in June 2006 was released on October 18 after more than five years in captivity. The release came after a long public campaign by the soldier's family, and off-and-on negotiations with Hamas through German and Egyptian intermediaries. The deal, in which Israel agreed to free more than 1,000 Palestinian terrorists held by Israel, faced strong opposition from the families of the victims and others who claimed that freeing master killers of civilians would increase the danger of new attacks against Israelis. Observers say that the ultimate agreement, which was not very different from previous deals which fell through at the last minute, was the result of a window of opportunity in which both sides were willing to show flexibility – Prime Minister Benjamin Netanyahu due to pressure from domestic social protests and Hamas because of changing relations due to the effect of the revolution in Egypt.
Iran Debate
In public and behind closed doors, a heated debate is going on in Israel over whether or not to attack Iran before the Islamic Republic builds its nuclear weapons. According to published reports, both Prime Minister Benjamin Netanyahu and Defense Minister Ehud Barak favor such a preemptive attack. One Ha'aretz reporter characterizes the prime minister's attitude as "wanting to be the one who saves Israel from another Holocaust."
Among the most vocal critics of such a move, which would be comparable to Israel's 1981 destruction of the Iraqi Osiris reactor before Saddam Hussein could build a bomb, is Meir Dagan, the recently retired chief of the Mossad, Israel's overseas intelligence agency. Dagan believes that Iran is on the way to build a bomb, but it won't have that capability for several years. Others give credence to Iranian threats that it wants to destroy Israel and will wage an all-out attack on Israel if an operation against its nuclear program is launched by Israel or anyone else.
Turkish Deal Mooted
Turkey will establish a special fund for compensating its citizens killed in the May 2010 Israeli takeover of the Turkish flagship Mavi Marmara, which led the ill-fated attempt to break Israel embargo on Gaza. The US made an elaborate proposal to resolve the still-simmering Israeli-Turkish crisis, according to a report in Ma'ariv. The paper said that the two countries will give each other flexibility to explain the deal to its own citizens, with Turkish Prime Minister Recep Tayyip Erdogan saying that Israel apologizes for the Mavi Marmara deaths while Israel's Benjamin Netanyahu declares, after a secret phone call between the two leaders, that he expressed regret.
Greek Air Exercise
Israel hosted Greece's Hellenic Air Force for a secret joint exercise in mid-November, according to a report in Ha'aretz. The Greeks sent five F-16 block 52 fighter jets for a five-day exercise at the Uvda airbase not far from Eilat. Israeli F-15 and F-16 jets, and tanker aircraft also participated in the exercise. In contrast with previous IAF exercises which took place in Greece, November's drill was not publicized by the IDF Spokesperson.
Ha'aretz said that Israel has been carrying out large-scale drills in foreign skies and inviting foreign air forces to use its training facilities. A mission from the Italian Air Force was due to arrive in Uvda in mid-December, as part of the effort to strengthen cooperation with European air forces.
Israel-South Sudan Warming Environment
An article in the Sudan Tribune, December 6
The Khartoum's ruling party mouthpiece, al-Intabaha is reporting that Israeli Prime Minister Benjamin Netanyahu will pay a historic one day visit to South Sudan, where the Prime Minister will hold meetings with both political and military leadership of South Sudan. As a sworn enemy of the Jewish people, Khartoum is anticipating such events with great deal of suspicion. For a very long time, Khartoum has been pointing fingers against 'Zionists' for meddling in the conflicts that the regime orchestrated and nurtured in the country. Nonetheless, the historic ties of the Jewish State to the people of South Sudan has its deep roots in the sheer struggle of the people of South Sudan, which dates back to the early 1960s. In 1960s through earlier 1970s, Israel was overtly assisting South Sudanese freedom fighters with weapons, training, and even sending in mercenaries, in order for the Southerners to resist against the onslaught of the regime in Khartoum.
At the time, which was the height of Cold War, Israel presented itself as an alternative, by curving a niche of its own little influence in the continent, which was a battleground for the Cold War warriors. Since then, Israel has diagnosed so well the regional threats and the shared strategic mutual interest it has in South Sudan and the entire East African region. The Jewish State figured out that it could not abandon the fate of the region to be ultimately determined by the two warring superpowers. Hence, Israel establishing significant and long lasting relationship with the East African region.
When South Sudan gained its independence, Israel never wasted much time, but rather moved swiftly to establish a full diplomatic relationship with the newly independent state of South Sudan. Therefore, it will not be a secret that Israeli leaders will meet soon South Sudanese leadership to discuss issues of mutual interest. After all, in September of this year, President Salva Kiir and Prime Minister Benjamin Netanyahu had met at the sideline of UN general assembly meeting. If anything, the Israeli-South Sudan relation needs to be enhanced, particularly at this point and time, where both countries have more in common.
Israel is already considering Sudan as a gateway for weapons smuggling—weapons which often originate from Iran through Sudan and into Egypt and finally, destined for Gaza Strip. As a proof, Israeli Air Force and commandos, managed on several occasions to intercept and destroy weapons bound for Gaza as they are being docked of Sudanese sea port. The Sudanese weapons smuggling ring clearly poses serious security risk to the state of Israel.
Sudan has also over the years established itself as a fertile ground for Islamic radicalization. Many brands of the radical jihadists and terrorist outfits, including the al-Qeada, Hamas, Hizbullah, and Islamic Jihad, called Khartoum home. Khalid Mishaal, the leader of Hamas just concluded a successful official visit in Khartoum, where he was hailed by his host as a hero.
Another issue of serious Israeli concern with Sudan is the country's cozy relationship with Israel's foe, Iran—a country that stands ready to wipe Israel off the face of the earth. Since taking power forcefully in the year 1989, the Islamic regime in Khartoum immediately made contact with Iran, flying in Iranian military trainers to model the country's armed forces along the dreaded Iranian Revolutionary Guards—a military built with clear aim to safeguard the Islamic system. That is why it is not surprising that Sudan is a major Arab country that forms the unholy Iranian-Arab alliance, alongside Syria, Hizbullah, Hamas and Islamic Jihad. The strength of this alliance is clearly evidenced when a delegation of this group traveled to Khartoum, led by Ali Larijani, the speaker of the Iranian parliament to express their full support for President Omar al-Bashir in wake of issuance of international arrest warrant against the Sudanese president.
With the anticipations of unpredictable governments in the neighboring countries, due to the recent Arab upraising, Israel stands a better chance by strengthening the old alliance to the South. Thus far, two of the principals of East African countries of Kenya and Uganda, have respectively made separate trips into Israel, in efforts to bolster the existing relationships. Therefore, South Sudan boosting of relationship with Israel is an added bonus to the regional strategic interest.
Israel's 10th Nobel Prize
Prof. Daniel Schechtman, 70, of the Technion Institute of Technology in Haifa, was awarded the Nobel Prize for Chemistry in a ceremony in Stockholm in early December. Schechtman, who was recognized for his discovery of quasicrystals, a previously unknown structure, was Israel's 10th Nobel laureate.
Pre-Elections Move?
Prime Minister Benjamin Netanyahu is moving up his Likud party primaries to January 31, 2012, apparently to take advantage of his strong position and win early re-election as the party's leader. The move also allows for the possibility of a break-up in the ruling coalition. Other potential candidates for the ruling party's leadership may include Deputy Prime Minister Silvan Shalom and Moshe Feiglin, leader of the far-right Manhigut Yehudit (Jewish Leadership) faction inside the party.
Channel 10 in Trouble
The Knesset Economics Committee, in a coalition party-line vote, refused to delay Channel 10's payment of NIS 60M (about $16M) owed in royalties. Coalition members claim that a moratorium would be nothing more than a subsidy to the station's main shareholders, multimillionaires Ron Lauder, Arnon Milchan and Joseph Maiman. Supporters of the request to delay accuse that this is an attempt to muzzle the channel's news department, which often airs investigations that are critical of the government, coalition members and ministers.
CSK Not Immigrating
Dominique Strauss-Kahn, the former head of the IMF, and his wife Anne Sinclair, a French journalist, have denied reports that they plan immigrating to Israel. The French media speculated that the couple were about to move to Israel after they paid a surprise visit to the country in late November. Strauss-Kahn and Sinclair, were in Israel as guests of French-born businessman Jean Friedmann, a former owner of the French TV station Canal Plus, at his Savion home.
Pipeline Blown Up Again
The pipeline carrying natural gas across the Sinai Peninsula to Israel and Jordan from Egypt was blown up again, for the ninth time this year, in late November. Globes said that terrorists attacked the pipeline in retaliation for the arrest of six Islamic Jihad members in Egypt, in advance of the first round of parliamentary elections in the country. The Israel Electric Corp. reportedly is looking for sources of liquefied petroleum gas (LPG) as a replacement for Egyptian gas, even though LPG is 2-3 times more costly.
Healthy Situation?
Israel spends less on healthcare but Israelis live longer, according to an OECD (Organization for Economic Cooperation and Development) survey. In 2009, Israel spent an average of 7.9% of its GDP on health compared with the OECD average of 9.6% of GDP. Moreover, the survey found that Israel has not raised GDP spending on health for 15 years, and said that public funding of health services in Israel amounts to 58% of the total compared with the OECD average of 72%.
Nevertheless, the same survey said Israeli average life expectancy is 80.6 years compared with the OECD's 79.5, and Israeli cancer and breast cancer survival rates are far higher than for the OECD as a whole.
World Title
Lee Korzitz, a 27-year-old windsurfer, took first place in the Women's RS:X class at the Sailing World Championships, held in early December in Perth, Australia.
The Economy
Budget Cuts Planned
The Finance Ministry is working on an eventuality plan for an across-the-board slashing of all ministry budgets, except education, if the global economic decline continues, according to a late November report in Globes. That would include an NIS 3B (about $800M) reduction in the defense budget.
There are increasingly strong signs that the world's problems may affect Israel, including an NIS 5B shortfall in tax collections and declining exports to both North America and Europe.
Nevertheless, the Bank of Israel said in a report that there was no immediate need to cut the budget and there would not be one unless concern about the government's deficit, which it anticipates will run as much as 1% higher vis-â-vis GDP than budgeted, gets out of hand.
Steinitz Defends Actions
"We're fighting a hard defensive battle for the Israeli economy," Finance Minister Yuval Steinitz said in late November. Speaking at a conference in the Negev city of Sderot, he said that "The battle for the economy, the battle for society, and the security situation are all connected. This battle isn't only a defensive battle for the economy, but for Israel's citizens. We've been fighting for three years to prevent mass unemployment of the kind seen in Spain, Italy, Ireland, Portugal, and the US... When I took up office, Israel's unemployment rate was projected to reach 10-15%, which would widen gaps and hurt millions of people and the poor." Heckled by demonstrators who charged him with "dismantling society" rather than caring for it, Steinitz boasted that the current government has succeeded so far "in preventing mass unemployment in Israel and creating growth, but this achievement must be fought for to continue. Education and welfare are important, but unemployment is the most important, even if times are tough. We must encourage investment in Israel, rather than drive away businesspeople."
Defense Minister Ehud Barak, who is fighting a running battle with Steinitz over the defense budget, said that cutting the defense budget now would repeat the mistake in the run-up to the 2006 Second Lebanon War. "My position is clear - defense is the existential condition, and with all the pain, it precedes quality of life. There is always room for streamlining, but the response to basic needs is Israel's insurance policy against our nation's environment in the Middle East."
Speaking at a business conference in Tel Aviv, Barak said that the "Arab Spring" is "the most important event in the region since the fall of the Ottoman Empire a century ago. Whole nations are rising up and bringing down their tyrants, and there is the threat of the Islamic movements."
Barak spoke of a "rising dimension of uncertainty", saying, "What is certain is that nothing is certain." He expressed the hope that, in the long term, democracy would rule in the Arab world, but that the current circumstances were dangerous. Firing a barb at Minister of Finance Yuval Steinitz, he said, "Public figures who believe that the risks to Israel have been reduced – I've heard some of them – are wrong."
Barak called the social protest "an important and exciting event, a protest by the backbone of Israeli society, which feels that its contract with the government and state has been violated and is no longer honored, that the solidarity that characterized us as a society for decades has gone." He said that the social protest was an opportunity for "a New Deal for the economy and society".
Central Bank to Lower Projection
The Bank of Israel will cut its growth prediction for 2012, probably from the current 3.2% to about the 2.9% predicted for Europe, Central Bank Governor Stanley Fischer told the Knesset Finance Committee in early December. Prof. Fischer, one of the world's most prestigious economists, said that Israel was likely to avoid a recession. The situation in Europe had improved slightly in terms of decision-making, he said, while warning that that "there will be a big mess" if countries quit the Eurozone.
"The Israeli economy is in good shape," said Fischer. "We have a lot more freedom of action than European countries and even the U.S., because of the positive things done by governments. If we act properly, we'll be able to successfully deal with the risks facing us. What is success? Avoiding a recession. But there is no doubt that what is happening around us will affect us, and we won't be able to grow as we once did."
Housing at High
78,000 homes were under construction at the end of September 2011, a ten-year high, the Central Bureau of Statistics reported.
Unemployment Low
Israeli unemployment amounted to only 5.6% in the third quarter, according to the Central Bureau of Statistics. Joblessness averaged 8.63% in 1992-2000, after peaking at a high of 11.4% in March 1992.
Record Month for Tourism
November 2011 was the best November ever for Israeli tourism, with 316,000 arrivals, the Central Bureau of Statistics says. The figure was up 2% from November 2010. About 3.1 million tourists entered Israel in the first 11 month of 2011, down 2% from January-November 2010.
El Al Profits Descend
El Al, the principal national air carrier, reported a 50% fall in profit for the third quarter of 2011, to $21M, down from $42.4M in the corresponding quarter of 2010. Revenue in the third quarter of 2011 rose 6% to $602M. El Al's operating expenditure, including jet fuel expenditure, rose 15% to $489M in the third quarter of 2011.
Ofer Family Dispute
The family of late billionaire Yuli Ofer, who died in September at the age of 87, is squabbling over the inheritance. At the heart of the dispute are Ofer's two wills, one dividing his estate equally between his son Doron and his daughter Leora, and the other making Leora the sole beneficiary of his estate – and in particular, his 37% share in Ofer Investments, the holding company of Yuli and his brother Sammy, who died earlier in the year. The late tycoon's third wife, Ruth, has subsequently joined in the contest over the inheritance.
Chinese Car Cooperation
A joint venture of the Israel Corporation, controlled by the Ofer family, and Chery Automobile Co. of China plans to begin sales of the first model of Qoros, a new made-in-China compact sedan, in Western Europe and China by 2013. As part of the cooperation, which started in 2007, a new factory with an annual output of 150,000 automobiles is going up in Changzhou, an industrial city near Shanghai.
Gas Reserves to Triple
Israel's potential gas discoveries may reach 1 trillion cubic meters, more than triple the current 300 billion, says Shuki Stern, director-general of the Israel Natural Gas Authority. Noting that current reserves are almost all in the Tamar offshore field, Stern said the figure will rise to 450 billion after production tests in the Leviathan field are complete, and that discovery of an additional 550 billion in Israel's territorial waters can be expected.
Turkish Trade
Trade with Turkey amounted to $2.8B in January-August, the Israel Export Institute said in October. As trade with Turkey continued to improve despite the shaky relations between the two countries, Turkey was Israel's seventh largest bilateral trading partner for the period.
Chinese Deal Completed
Koor Industries, of Israel's IDB Group, completed a deal to sell a 60% stake in its Makteshim-Agan Industries to ChemChina (China National Chemical Corp.). Makteshim-Agan is based in Lod, east of Tel Aviv. The agreement, which was the largest ever between the Chinese government and an Israeli company, gives Makhteshim access to low-cost production in China, while maintaining its European licenses and distribution agreements.
China-Israel Funds
Israel's Catalyst Investments and OneGate Capital of Shanghai, a private equity firm, have secured a $150M closing for China Israel Technology Fund, a joint venture to be based in Tel Aviv and Shanghai. The partners also plan another fund; both will enable Chinese companies to utilize Israeli technology and Israeli companies to access the Chinese market. The funds will specialize in cleantech, agritech, advanced manufacturing, advanced information technology and other areas of Israeli expertise. Yair Shamir, the former chairman of Israel Aerospace Industries (IAI) and El Al, the national air carrier, is Catalyst's managing partner.
Miki Arison Exits Hapoalim
Micky Arison, head of U.S.-based Carnival Cruise Lines and principal owner of the Miami Heat NBA basketball team, has severed his ties with Israel's Bank Hapoalim by selling his 23% in Arison Holdings Ltd., to his younger, Israel-based sister Shari. Arison Holdings owns 20.2% and control of Bank Hapoalim, one of Israel's two largest banks. The Israeli-American Arisons are heirs of the late billionaire Ted Arison, Carnival's founder.
Mergers & Acquisitions
Bank Leumi – Banque Safdie
Israel's Bank Leumi has completed its acquisition of Banque Safdie SA of Geneva. The purchase price was 143M Swiss francs ($156M), 20% less than the original price, due to a 40% decline in the assets of the Swiss bank. Banque Safdie will be merged into Bank Leumi Switzerland early next year.
CHS-Solbar
St. Paul, Minnesota-based CHS is acquiring Solbar Industries, an Israeli manufacturer of soy products, for $113M from its previous owners, including Kibbutz Hatzor (21.6%), Mivtach Shamir Holdings Ltd. (16.6%), and First Israel Mezzanine Investors (27.8%).
CHS is active in grain merchandising and transportation, sunflower and soybean processing, wholesale fertilizer, animal feed production and sale, and farm supply.
Alvarion-Wavion
Alvarion, the Israeli-rooted 4G networking specialist, will reportedly fire dozens of employees a week after the closing of its acquisition of Wavion, a WiFi developer based in Yokne'am near Haifa, for $30M. Alvarion has been trying to expand its business beyond WiMAX wireless broadband solutions, which have failed to take off, and Wavion gives it WiFi applications. Wavion had 70 employees before its takeover.
Permira UPS Netafim Holding
Permira, a private European fund, has increased its holding in Israel's Netafim by purchasing an additional 6.5% of the drip irrigation firm from Kibbutz Hatzerim for $50M. Last summer, Permira purchased 62% of Netafim from the Markstone investment fund, Tene and two kibbutzim, Yiftah and Magal, at a company value of $850M. Hatzerim, which at the time retained 38% of Netafim, now will hold a 32% share.
FDS-SciGen Israel
Britain's FDS Pharma, based in Surrey, has acquired SciGen Israel Ltd., a Rehovot plant manufacturing hepatitis vaccine, for $2M plus royalties. FDS Pharma owns patents to vaccines and produces active pharmaceutical ingredients (APIs) for the Russian and other markets, and is run by Russian executives.
Nice-Merced
NICE Systems, a worldwide provider of recording and digital management solutions based in Ra'anana, northeast of Tel Aviv, has acquired Merced Systems of Silicon Valley and London, for $150M. Merced's software specializes in service coaching, incentive management, performance analytics and other analytic solutions on an enterprise level.
DSP-Bonetone
The DSP Group, a wireless chipset solution provider based in San Jose, California, has acquired BoneTone Communications of Rosh Ha'ayin, in the high-tech belt northeast of Tel Aviv, for about $10M. Two years ago, the companies initiated a strategic partnership, in which DSP acquired a stake in the maker of innovative chip solutions improving voice intelligibility and audio quality for mobile devices.
Israel Chemicals-Nutrisi
Israel Chemicals, seeking to become one of the world's largest specialty chemical firms, has bought out its Chilean partner, Sociedad Qimica y Minera de Chile, in Belgian fertilizer components maker Nutrisi Holdings. Size of the deal was not disclosed. The two companies owned Nutrisi in equal shares. Nutrisi and Norway's Yara International ASA own in equal shares NU3, the world's largest manufacturer of soluble NPK (nitrogen), phosphorous, and potassium fertilizer components. NU3 sells its products in European global markets.
Arris-Bigband
Global broadband specialist the ARRIS Group, based in Suwanee, Georgia, has acquired BigBand Networks for $172M. Digital video specialist BigBand, founded in Israel in the early part of the 21st century, has corporate offices in Redwood City, California, and major facilities in Tel Aviv.
Newport-Ophir
Newport Corporation of Irvine, California, a global supplier of advanced technology products for the scientific research, aerospace and defense, microelectronics and precision manufacturing sectors, has completed the $230M acquisition of Jerusalem's Israel's Ophir Optronics. In the past, the Elul Group, which currently represents Newport in Israel, held 50% of the equity in Ophir, a maker of infrared optics for lasers and advanced measurement equipment.
Intel-Telmap
Chipmaker Intel has acquired Israeli navigation software maker Telmap for $300-$350M in October. Telmap offers location-based services to provide details on traffic data, speed cameras and local offerings; Intel, the world's No. 1 chipmaker, has two Fab manufacturing plants and four development centers in Israel.
Monsanto-Beelogics
Leading world chemical firm Monsanto has acquired Beeologics, a developer of targeted biological pest and disease control solutions for bees and bee colonies. Purchase price was not disclosed. Among the products of Beeologics, which is centered in Rehovot, south of Tel Aviv, but also has operations in Florida, is one that protects bee health by utilizing a naturally-occurring process. Monsanto intends to apply Beeologics core technology for its discovery and development pipeline.
RadVision Talks
Advanced acquisition talks are underway between Avaya PC, a privately held networking and communications firm headquartered in Basking Ridge, New Jersey, and Tel Aviv-based RadVision. The mooted purchase price is around $200M, according to a report in Globes.
RadVision, whose principal owners are brothers Zohar and Yehuda Zisapel, has had revenue problems since 2009 when Cisco, its largest customer, was acquired by Tandberg of Norway, the Israeli company's rival. The acquisition of Aethra of Italy in 2010 has enhanced RadVision's end-to-end conferencing capability, but failed to compensate for the loss of Cisco.
Apple's First Israeli Buy?
The Hebrew-language business press has reported advanced talks between Apple Inc., the computer giant, and flash-storage solutions developer Anobit for $400-$500M. Anobit, founded in 2007 and based in Herzliya, north of Tel Aviv, would be the first Israeli firm purchased by Apple.
Anobit's technology, which enables the storage of large quantities of data for enterprises and mobile customers, would be used to enhance the data-storage capabilities of Apple's signature iPad, iPhone and MacBook products. Apple might also use Anobit's staff and facilities as the base for its own R&D center in Israel.
According to Calcalist, the beneficiaries of the deal are Anobit's founders, president/CEO Prof. Ehud Weinstein, Ariel Meislos and Ophir Shalvi, the Israeli Pitango and American Battery funds, and the VC operations of Intel and Micron. (For Pitango a deal would be the second major exit in a month, after the fund sold Video Surf to Intel. Founders Weinstein and Shalvi sold Libit for $365M in 1999, and Meislos was a partner in Passave, sold for $305M five years ago.)
The deal, if it goes through, will be one of the biggest ever for Apple, which up to now has acquired no less than 33 companies, one of which, Next, was bought for as much as $700M.
In the last two years, Anobit has become a major supplier of flash-memory chips. In August, the company reported sales of $20M since the start of 2011.
Globes reports that Apple made the decision to set up a development center in Israel, the only one outside of its corporate headquarters in Cupertino, before and not regardless of the outcome of the Anobit acquisition talks. The paper says the company has already designated Israeli high-tech veteran Aharon Aharon to head the new center.
Finance & Investment
Romanian Pullout?
Tnuva Food Industries, Israel's dominant food company, is contemplating a close-down of Romanian operations, according to a report in Globes. Tnuva invested NIS 300M (about $80M) when it set up Tnuva Romanian Dairies in 2005, together with a European investment bank and a private partner.
Looking Good
eyeSight Mobile Technologies, based in Herzliya in the high-tech belt north of Tel Aviv, has raised $4.2M in a second round of financing including Ceva Inc and Mitsui & Co. eyeSight's Gesture Recognition Technology is used in touch-free interfaces for digital devices, including Apple's IPod and Ipad.
Imperva Breaks Nasfaq Barrier
Imperva, an Israeli company headquartered in Redwood Shores, California, raised $90M based on a company value of $190M in a NASDAQ initial public offering in November. It was the first successful NASDAQ offering for an Israeli company this year.
Imperva's software, designed to work across different systems in on-site and cloud data centers, protects against hackers and cuts the risk of business-data theft. The firm says its customers include four of the top five telecom firms, three of the top five commercial banks in the U.S., three of the top five financial data service firms, as well as government agencies around the world and more than 100 of the Fortune 1000 companies.
Klarna Raises $155M
Swedish-Israeli start-up Klarna has raised $155M in a new financing round. The firm, which provides e-commerce solutions in the Scandinavian countries, Germany and the Netherlands, got the funding from DST Global and General Atlantic; Sequoia Capital invested in the firm in 2010. It handles $2.5 billion-plus in transactions for 14,000 European merchants. Karna employs about 30 people in its Tel Aviv R&D center.
Super-Sol Deal Off
IDB Holding's deal to sell its controlling interest in the Super-Sol supermarket chain to a group led by Leo Noe, Matthew Bronfman and Shalom Fisher for NIS 2.4B (about $660M) was called off in mid-November. The transaction seems to have been killed, in part, by the prospect that restrictions proposed by the Trajtenberg Committee on reshaping the economy to restrict companies from holding major stakes in both financial and non-financial firms might have required the Bronfman family, one of Super-Sol's potential future owners, to sell an interest in Israel Discount Bank. Cancellation of the sale of Super-Sol, Israel's largest supermarket chain, was a blow to the liquidity problems of IDB's major shareholder, businessman Nochi Dankner.
Israel Corp. Buys Chilean Power Plant
The Israeli Corporation has acquired 75% of Central Tierra Amarilla, a Chilean power company. Price of the transaction for the Chilean company, which owns a 155MW power station north of Santiago and owes $60M to banks, was $15M.
The purchase was made through a Lima-based company owned by Israel Corp. subsidiary IC Power, which operates power stations producing a total of 3,000 MW in Peru, Bolivia, Chile, Panama, El Salvador, Jamaica, and the Dominican Republic.
Science & High Technology
Generic Lipitor
A U.S. subsidiary of Israel's Teva Pharmaceuticals and India's Ranbaxy Laboratories have agreed to share profits on Ranbaxy's sales of Atorvastatin Calcium Tablets (generic Lipitor) during Ranbaxy's 180-day first-to-file exclusivity period, will be paid to Teva. Terms were not disclosed. The U.S. Food and Drug Administration (FDA) has granted Ranbaxy exclusivity to market a generic version of Pfizer's cholesterol-fighting Lipitor, whose patent expired on November 30. The first six months are particularly important because profits will be high, prior to other drug makers entering the market with their versions of Lipitor and bringing prices down sharply.
Desalination Expands
Yuval Steinitz, the Minister of Finance and Minister of National Infrastructures Uzi Landau has signed an agreement for the franchise of a seawater desalination plant at Ashdod, south of Tel Aviv. The plant, to be operated by a subsidiary of the Mekorot national water company, will produce 100 million cubic meters of water a year, at a price of NIS 2.40 (about $0.67) per cubic meter.
The Ashdod plant, due to come on line in early 2013, will be Israel's fourth desalination plant using the state-of-the-art reverse osmosis system. Already operational are a 120-million cubic meter plant at Ashkelon and a 45-million cubic meter plant at Palmachim, both south of Tel Aviv, and a 127-million cubic meter plant at Hadera, between Tel Aviv and Haifa. Together, with another plant due to come online in 2013, the plants are due to produce 540 million cubic meters of water a year, 75% of Israel domestic water consumption, with capacity increasing to 750 million cubic meters of water a year by 2020.
Down with Sheet Music?
Sheet music may soon be obsolete, thanks to a new IPad app developed by Israeli start-up Tonara. The app, developed by CEO Yair Lavi and CTO Ivgeni Begelfort, can listen to tunes and display musical notes of what is being played, automatically turn pages. The free app comes with a limited number of classic recordings and the option to purchase others, which can be downloaded for $1 per song from a built-in app store. In an effort to appeal to young audiences, sheet music for songs by Beyonce and Lady Gaga will be available for $3-6.
Solar Investment
According to Globes, Noy Infrastructure Fund, whose investors include Poalim Capital Markets, Clal Insurance Enterprise Holdings, Menorah Mivtachim Holdings and DS Aprex Holdings, is about to sign an agreement to acquire 10% of a 4.9-megawatt photovoltaic solar energy farm owned by Arava Power Company and Kibbutz Ketura at a value of $20M. The electricity-generating farm has been hooked up to the national grid since August 30 and received a permanent power production license on October 11. Globes previously disclosed that Noy is discussing an investment in Arava Power-Ketura's projected $200M, 40-mWt PV field that could provide a third of Eilat's electricity.
IAI to Demonstrate Desalination Plant
Israel Aerospace Industries (IAI) plans to build a seawater desalination plant to demonstrate new technology it has developed, according to a report in Globes. Speaking at a conference in Jerusalem, IAI official Baruch Mevorach did not disclose details of the technology, other than to say that it was :"a new approach that is a more effective and economical."
Earlier this year, IAI said it was collaborating with a European company to develop, produce, and build innovative electricity-generating wind turbines. The companies decided to build two experimental wind farms at a cost of €43M.
Eli Hurvitz Dies
Eli Hurvitz, the former CEO and chairman of Teva Pharmaceutical Industries, died of cancer on November 21 at the age of 79. Hurvitz resigned as Teva's chairman two years ago, after serving as CEO for 35 years, turning it into the world's top maker of generic drugs. He was awarded the Israel Prize in 2002 for his contribution to the country.
High-Tech Hub
The British Embassy in Tel Aviv has opened a High-Tech Hub for Israeli companies, designed to promote lasting technology partnerships between the Britain and Israel. The Hub's staff will include experts in digital, cleantech, biotech and the Arab Israeli high-tech community.
Virgin Sale
Network management systems of Israel's Amdocs will be supplied to Virgin Media of the UK. Size of the deal was not disclosed, but reportedly is in the $10-$20M range. Virgin Media was Britain's first quad-play provider of broadband, TV, phone and mobile, and is the UK.'s only telecom provider with a nationwide fiber-optic next-generation network.
Columbian Deal?
Israel's Gilat Satellite Networks is a finalist in the tender to provide satellite communications services to the Columbian government, according to a report in Globes. The company already has extensive operations in Columbia and Peru, its South American neighbor, providing VSAT terminals for Internet and telephony connections in rural areas. Gilat's revenues in the two countries, where it has over 200 employees, amounted to $36M in 2010.
Nigerian Bridge Contract
Shikun u'Binui (Housing and Construction), a subsidiary of Bank Hapoalim controlling shareholder Shari Arison Holdings, has won a contract to build a $210M bridge over the Benue River in eastern Nigeria. In addition to the 2.1-km. four-lane span, the Israeli company will build 22 km. of access roads.
Aerospace & Defense
Elbit Seen Leading IMI Buyer
Private defense contractor Elbit Systems is seen as the leading candidate to purchase Israel Military Industries (IMI), according to a report in Ma'ariv. The privatization process, due to begin in mid-December with approval of a potential sale by the Knesset's Finance Committee, is expected to be an extended process.
Under the criteria set by the government, the Defense Ministry and the Government Companies Authority (GCA), the buyer must be Israeli, must pass a security check and must have a Certificate of Honesty. In addition, the GCA is expected to exclude government companies from bidding for IMI, which has a tentative value of about NIS 1B (just over $300M).
Key to the deal is likely to be a government write-off of an estimated NIS 1B it is owed by IMI, the Knesset Finance Committee was told in mid-December.
Flying Elephant
Elbit has been granted an Israel Defense Forces contract to develop Flying Elephant, a long-range power-propelled parachute that can carry supplies to troops behind enemy lines. The payload of catapult-launched, propeller-driven Flying Elephant will be one ton. Guided by GPS, it should be able to land within 30 meters of designated coordinates. Development of Flying Elephant began shortly after the 2006 Second Lebanon War.
Amos 5 Launched
Israel's Amos 5 communications satellite was launched on December 11 from Baikonur Cosmodrome in Kazakhstan. The satellite is expected to begin commercial operations early next year, after undergoing in-orbit testing. Spacecom, controlled by businessman Shaul Elovitz, has already signed several satellite communications service contracts for the Amos 5, including a $27.6M five-year deal with an African communications provider.
Choosing a Trainer
Israel will soon decide on a new jet trainer to replace the A4 Skyhawks currently used for that purpose. Candidates for the deal, for 25 to 35 planes at a total cost of about $1B, are Korean Aerospace Industries' T-50 Golden Eagle and the M-346, manufactured by Alenia Aermacchi of Italy. The planes will not be purchased directly by the IAF, but by Thor, a joint venture of government-owned IAI and private defense contractor Elbit, which will sell flying hours to the IAF.
Indian Purchase
India is purchasing two additional Phalcon AWACS airborne command-and-control systems from IAI, according to a November report in the Times of India. Israel sold India three Phalcon systems in 2004.
Elbit's Simulators
Elbit has introduced trainers for driving armored vehicles and to train forward observers at I/ITSCE 2011, a modeling, simulation and training conference held recently in Orlando, Florida.
One customer is the Israel Defense Forces, which like other armies is investing in simulators as a cost-cutting measure. According to the manufacturer, the armored driving trainer was designed to provide trainee drivers with a realistic driving experience under fire in combat conditions and can simulate stormy weather, poor visibility, off-road conditions, including mud and ice, and difficult terrain. The forward observer trainer simulates real-life battlefield situations for forward observers posted along all types of terrain, performing border control and protection. It is interoperable with C4I systems, including fire planning, ranging and field operation as well as target detection, recognition, identification, acquisition and engagement using day and night sensors.
Plasan's Sales Down
Sales at armored vehicle specialist Plasan, based in Kibbutz Sasa on Israel's northern border, have dipped, according to a report in Globes. A private company owned by the kibbutz, Plasan does not report profits or sales, but there have been reports of between 100 and 150 layoffs at the firm's factory. The decline is said to be cyclical, and to be due to falling demand brought about by the impending withdrawal of the U.S. military from Iraq, the thinning-out of the American presence in the Gulf and reduced defense budgets due to the global economic crisis.
Combat Training System Sale
An unnamed foreign customer has purchased the next-generation EHUD Autonomous Air Combat Maneuvering Instrumentation system from Israel Aerospace Industries, for $35M. IAI said that the system will provide a significant leap in performance to modern joint training capabilities for air, ground and naval forces.
Unmanned Superpower
Israel is a superpower in unmanned military systems, according to a report in Globes. Paving the way are Unmanned Aerial Vehicles (UAV), which Israel has deployed successfully for four decades (the IDF's UAV squadron recently marked its 40th anniversary) and has exported to countries around the world.
Born in the 1970s after the cancellation for financial reasons of the effort to build the Lavie, a made-in-Israel warplane, Israeli UAVs got their operational debut in Operation Peace for Galilee, the 1982 first Lebanon war. In recent years, UAVs have played an important operational as well as reconnaissance role in anti-terror operations over Lebanon and in the Gaza Strip.
Also in various advanced stages of development are Urban Aeronautics' Air Mule, an unmanned rotorless aircraft designed for use as a flying ambulance, in medivac rescue missions, and for use in tight urban environments where conventional helicopters have no access, and Picador of Aeronautics Ltd., whose primary mission will be naval intelligence.
Israeli prowess in unmanned systems is not restricted to aircraft: Genius, a joint venture of IAI and Elbit, produces the Guardium, an unmanned ground vehicle that has been successfully deployed on patrol missions along the Gaza border. At sea, Elbit's Silver Marlin unmanned surface vehicle is said to be capable of mine detection, search-and-rescue operations, and intelligence gathering on suspicious vessels. In addition, Elbit has developed the Stingray USV, which resembles a jet ski and can be used for protecting seaports, emergency management, damage assessment, and artillery practice against moving targets.
Iron Dome for Haifa?
A battery of Israel's Iron Dome missile defense system may be permanently deployed in Haifa Bay to protect the oil refineries there, Home Front Defense Minister Matan Vilna'i has suggested. After a meeting with Oil Refineries CEO Pinhas Buchris, a former director-general of the Defense Ministry, Vilna'i said the refineries "are crucial to the continued functioning of Israel's economy in times of crisis." He made the statement a few hours after Sheikh Hassan Nasrallah, the Hizballah leader, said his organization was capable of attacking "way beyond Haifa."
Three batteries of the Iron Dome system, developed by Rafael, have been deployed in southern Israel, in areas under threat from short-range rockets fired from the Gaza Strip.
Tammuz Accuracy Upgraded
A few months after it was unveiled, Israel's Tammuz anti-tank missile has been upgraded to enhance its accuracy. The new system includes a dot that is fixed on the target, and viewed by the launch crew via a special camera on the missile, allowing soldiers to follow the missile from the moment of launch all the way to impact.
The system, due to be deployed in the near future, improves the accuracy of missiles, allows for in-flight course corrections and improves the ability to avoid collateral damage and injury to innocent civilians.
In a parallel development, the Artillery Corps, under the command of Brig.-Gen. David Suissa, is preparing to absorb a new system that will enable the firing of advanced rockets still in the development stage.
Griffin Chosen
Switzerland has selected the Swiss Griffin aircraft to replace its F-5 warplanes. Also participating in the deal for 22 Griffins to replace 41 F-5 warplanes and 12 trainers, are the French subsidiary of Israel's Rafael and Eurofighter.
Dolphin Sub
The German government has approved the subsidized sale of a Dolphin-type submarine to Israel. Germany will allocate $180M, about a third of the cost of the vessel, which will be the Israel Navy's fourth Dolphin.
DHL Deal Due
IAI and international cargo firm DHL are in the final stages of negotiations on a $55M deal for the reconfiguration of five Boeing 767 airliners from passenger to cargo. Calcalist quoted DHL Express Israel manager Ori Sharon as saying that the contract was part of DHL's overall strategy of adapting its fleet, currently amounting to 260 aircraft, to long-range assignments in order to "shorten delivery time to intercontinental clients."
Third-quarter results of government-owned IAI, published in late November, show a 88% fall in profits from $25M to $3M, largely attributable to $45M in financing costs.
Naval Recon Plane
IAI's Elta subsidiary will market naval reconnaissance aircraft in collaboration with Canada's Bombardier, according to a report in Ma'ariv. The aircraft, based on Bombardier's Q400 twin-turboprop civilian aircraft, are expected to sell for $200-$250M, 20-30% lower than comparative aircraft on military platforms.
The maritime patrol, anti-submarine warfare and search-and-rescue-configuration aircraft is being offered by Elta/Bombardier in cooperation with Canada's Field Aviation. It include Elta's EL/M-2022 maritime surveillance radar, optical payload and signals intelligence-gathering equipment.
Elbit Contracts
Elbit has won an $11M contract to supply its Lightweight Weapons Stations (LWS) for armored vehicles to the Israel Defense Forces, and a $10M for an unnamed European army. Elbit will develop and mount 7.62mm, 12.7mm and 40mm LWS on armored personnel carriers (APCs) and other IDF armored fighting vehicles over an 18-month period. It will also supply a 12.7mm LWS to be mounted on the European army's Pandur 6x6 armored cars over a 12-month period.
Meanwhile Elbit Systems of America, an Elbit subsidiary, has bought out the stake of its partner General Dynamics in UAS Dynamics, the two defense contractors' joint unmanned aerial vehicle (UAV) venture. UAS will become part of Elbit of America's Unmanned Systems business unit, responsible for both airborne and seaborne unmanned systems. Size of the deal was not disclosed.
New IAI Subsidiary in the US
IAI plans to set up Elta North America, a subsidiary to market electronic defense products of its Ashdod-based Elta Systems in the Western Hemisphere. Elta North America will resemble Mississippi-based Stark Aerospace, established by IAI five years ago to manufacture and market IAI unmanned aerial vehicles for the Americas market.
Eyes in the Sky
A new ground reconnaissance aircraft has been developed by Elta, based on Gulfstream-IAI G-280 executive aircraft and Elta's JSTARS sensor system. The configuration employs JSTARS because the G-280 is too small to accommodate AEW or SIGINT systems.
Avishai Yitzhakian, deputy GM of Elta's airborne division, says that the system is ideally suited for use with ground forces in places like Afghanistan, where it is an "ideal platform" for providing ground commanders with real-time information. He said that JSTARS, which has also been mounted on smaller aircraft platforms, AEW and SIGINT, comprise a growing market that is one of Elta's major growth engines.
Elbit Part of KC-390
AEL, the Brazilian subsidiary of Elbit, has signed a $25M deal to provide Brazilian aerospace firm Embraer with three systems for the KC-390 transport-tanker aircraft. The systems are the Self-Protection Suite (SPS), the Directed Infrared Countermeasures (DIRCM) anti-missile defense, and the Head-Up Display pilot orientation system.
Embraer is developing the KC-390 for the Brazilian Air Force; first deliveries are due in 2015.
Sweet Music for Airliners
Amid reports that as many as 20,000 shoulder-launched anti-aircraft missiles were missing in Libya and suspicions that some of them may have made their way into the hands of terrorists in the Sinai, Elbit's subsidiary El-Op gave journalists a look at its airliner-protection system, C-Music. El-Op officials noted that the system, now in its final stages of development, uses DIRCM, a directional infrared countermeasures system which diverts incoming missiles from aircraft rather than intercepting and exploding them.
Elbit, El-Op's parent company, recently won a $280M Defense Ministry contract to upgrade Israel Defense Forces communications.
