Elul Group News Analysis - February 2012
General News Summary
Iranian Threat Looms
The Iranian threat looms larger and larger on the Israeli consciousness as debate continues over a possible preemptive strike against Teheran's nuclear capabilities before the Islamic Republic actually produces a bomb. In early February, Chief of Staff Lt.-Gen. Benny Gantz told a security conference in Herzliya that the international community must take “determined action” against Iran's nuclear push and Maj.-Gen. Aviv Kochavi, chief of IDF Military Intelligence, said that the Iranians already have enough fissionable material to produce four bombs.
Nuclear Iran was also the main topic on the agenda during the late-January visit to Israel of US Chief of Staff Gen. Martin Dempsey. At least one unconfirmed report said that President Barack Obama has dispatched Dempsey to stop Israel from launching an attack on its own. The reports contradict reassurances from no less than Defense Minister Ehud Barak, who said in mid-January that an Israeli attack on Iran is “very far off,” and stated last December that a nuclear Iran does not pose an existential threat to Israel. Nevertheless, he left the military option open – if international sanctions do not succeed.
On the other hand, Dr. Ronen Bergman, an Israeli journalist and Iran expert, suggests that, perhaps for the first time, the conditions for an Israeli attack may be right. In a widely-quoted article in the New York Times Magazine, Bergman outlines three questions which must be answered in the affirmative before Israel takes action:- is Israel able to cause enough damage to bring about major delays in Iran's nuclear project? Does Israel have “overt or tacit support, particularly from America” for such an attack? and have other means of containment been exhausted? According to Barak, many Israeli leaders now believe that the answer to all three questions is “yes.”
Added indication might be taken from statements made in early February by Strategic Planning Minister and Vice-Premier Moshe (Boogie) Ya'alon. Ya'alon, a former chief of staff, said that the West has the capability of hitting all of Iran's military nuclear facilities. A Washington Post report says US Defense Secretary Leon Pannetta believes there is a “strong possibility” that Israel could attack Iran by this spring. The report, by analyst David Ignatius, says US officials indicate that Washington does not have concrete intelligence on definite plans for an attack, but believe that Israel has made contingency plans and tentative preparations for an operation. The feeling in Washington, according to the report, is that the Israeli leadership has not yet made a final decision to attack Iran.
Look Who's (Not) Talking
Prime Minister Benjamin Netanyahu has asked world leaders to press the Palestinians to continue a series of pre-negotiation meetings held in Amman, Jordan during the month of January. The Israeli leader made the request, over the span of less than two days, to US Secretary of State Hillary Clinton, U.N. Secretary-General Ban Ki-moon, Quartet envoy Tony Blair and German Foreign Minister Guido Westerwelle.
The Palestinians, however, don't seem interested. At about the same time, Netanyahu made his requests, Palestinian President Mahmoud Abbas was saying that the talks had ended. He did, however, leave open the possibility that they might be resumed, but only under certain conditions, after his consultations with representatives of the Arab League in early February.
The Palestinians say that there was little or no progress in the five meetings held in Amman, which were part of an international effort to get both sides back to formal peace negotiations. They say that Israel must present concrete proposals on borders and security for the talks to resume, sticking to their interpretation of the three-month deadline to produce such proposals made in the request by the Quartet – the US, UN, EU and Russia – on October 26. Israel contends that the three-month period only started on January 3, when the Amman talks began, and that the deadline is in April.
Outside observers suggest that both sides are merely posturing. The Palestinians are interested primarily in seeking international intervention, as exemplified by their request last September for UN membership, while Israel's current coalition government ideologically refuses to make the kind of concessions that the Palestinians demand.
No Elections, Yet...
Prime Minister Benjamin Netanyahu says that Israel's next elections may not take place for quite a while, but in any event he has taken the first step towards being ready for them. In late January, Netanyahu was re-elected to head the Likud, Israel's ruling party, defeating right-wing challenger Moshe Feiglin and garnering 77% of the vote.
At the same time, two of the other three large parties were readying themselves for an election: Kadima, now led by Tzipi Livni, will hold its own leadership primaries on March 27 while Labor already has a new leader, MK Shelly Yachimovich, elected last fall.
Netanyahu's Denial
Prime Minister Benjamin Netanyahu has denied a report by a journalist, who said the Israeli leader told him that Israel's two biggest enemies are the New York Times and Israel's Ha'aretz newspapers. Steve Linde, editor of the Jerusalem Post, told a Tel Aviv conference that Netanyahu made the remark to him in a private meeting “a couple of weeks” earlier.
“'You know, Steve, we have two main enemies,'” Linde said Netanyahu told him, according to a recording of the Tel Aviv speech provided to the Jewish Telegraphic Agency. “And I thought he was going to talk about, you know, Iran, maybe Hamas. He said it’s The New York Times and Ha'aretz. He said they set the agenda for an anti-Israel campaign all over the world. Journalists read them every morning and base their news stories … on what they read in The New York Times and Ha'aretz.”
Linde later published a “clarification,” at the request of the Prime Minister's Office. In it he said that his remarks were an interpretation of what Netanyahu had told him.
Tops in Cyber Defense
Israel was one of the top three countries (with Finland and Sweden) in defense against cyber attacks, according to a survey of leading experts in the field conducted by the McAfee Internet security firm. The three countries scored 4.5 (out of 5) in perceived quality of their ability to cope with attacks. The US, Spain, France, Estonia and the Netherlands each had a ranking of 4.0, while Mexico, Brazil and China were among a group of countries least able to defend themselves against cyber attacks, according to a report in the Globes business daily.
Neighbor Watch
The victory of Islamist parties in Egypt's parliamentary elections is unsettling for Israelis, whose concerns were dismissed a year ago when they said that the Arab Spring, heralded in the world as a move towards greater freedom, could bring radical governments to power. Speaking in December, Defense Minister Ehud Barak called election results “very, very disturbing.” Though Egypt's interim leader, Field Marshal Mohamed Hussein Tantawi, has said Egypt will honor the 1979 peace treaty with Israel, Israelis are far from sure that future governments will take the same position.
There are also questions about what will happen if and when the Syrian regime of President Bashar al-Assad falls. Particularly unsettling is the reported presence of Iranian Revolutionary Guard units helping Assad's troops against his own people.
The Economy
In Contrast to Europeans
Standard & Poor's early-January downgrading of the credit ratings of nine European countries including France serves to highlight the strength of the Israeli economy, Prime Minister Benjamin Netanyahu pointed out at the start of a January 15 cabinet meeting. Only four months ago the same agency raised Israel's credit rating, he pointed out with pride, saying: “The Israeli economy stands out, positively, as a result of our responsible policy. We are not breaking the budgetary framework. We are upholding the first rule in managing an economy, whether of a family, a firm or a country; over time, one does not spend more than what one brings in, than what one makes. And if you did so, you make the correction gradually. This is what we are doing...”
GDP – 4.8% Growth in 2011
Israel's Gross Domestic Product (GDP) grew by 4.8% in 2011, according to an early-January report of the Central Bureau of Statistics. In general the performance of the Israeli economy exceeded that of fellow member countries of the OECD, the Organization for Economic Cooperation and Development.
Per capita GDP, up 2.9%, was double the OECD average. GDP growth, at 4.8%, was more than double the US 1.7% and the OECD's 1.9%. Average unemployment was 3.6% (9% in the US, 8% in the OECD).
Towards the end of the year, growth rates slowed. In the third quarter, GDP increased at an annualized 3.9%, in the fourth the figure was 3.7%.
Deficit to Grow
An anticipated NIS 11B (about $3B) shortfall in tax revenues has caused the Treasury to raise its estimate of the 2012 budget deficit from the 2% of GDP set in the 2010 biennial budget to 3.4%, Finance Minister Yuval Steinitz said.
Low Unemployment
Israeli unemployment in October was not a record 5%, the Central Bureau Statistics said in early January, correcting an earlier announcement. Instead, the CBS said that joblessness in October-November stood at 5.4%, following 6.2% in January and 5.6% in May.
Merrill Lynch Prediction
The Israeli economy will grow by 3.5% in 2012, according to projections of Bill O'Neil, the chief investment officer at Merrill Lynch. In O'Neil's assessment, possible difficulties encountered due to the fact that 17% of Israel's economy is linked to exports to European countries currently in financial trouble will be compensated for by Israeli consumption, “which will preserve the GDP.”
Last November, the OECD predicted Israel's 2012 GDP would grow by 2.9%.
Interest Cut
The Bank of Israel cut its basic interest rate by 25 basis points to 2.5% in late January, due to the continued economic slowdown. The cut follows previous reductions, of 25 points each, in September and November 2011.
India Agriculture Links
Israel will open three “centers of agricultural excellence” in India's Maharashtra State, Israeli Consul-General Orna Sagiv said in mid-January. The centers will be in Nagpur, which will specialize in citrus technology, Dapoli and Rahuri. Sagiv also noted that there are 25 Indian students in Israel, taking courses in agricultural technology.
Taking it Easy(Jet)
Low-rate airline EasyJet carried 225,000 passengers on its Israel-Europe routes in 2011, 55% more than in 2010. Part of the reason was a second Israeli route, Basel-Tel Aviv, which began in December 2010, and the subsequent increase of flights from three to four per week.
Diamond Exports
Diamond exports by Israel's top 25 companies totaled $2.4B in 2011, the Ministry of Industry, Trade and Labor has reported. Total net exports of polished diamonds were $7.2B. After many years, the Lev Leviev firm lost its top ranking among exporters to Leo Schachter diamonds, with $403M in diamond exports. Leviev did not disclose the volume of his firm's exports.
Export Shift
The 27 EU member states supplanted the US as Israel's top export destination in 2011, according to an analysis of Central Bureau of Statistics data released in late January by the Meitav Investment House. Exports to Europe, which now account for a third of Israel's total exports, rose by 20% since 2009, according to Meitav, while exports to the US declined by 2%.
The top European destinations for Israeli exports in 2011 were the UK, where exports rose 53% to $10B, the Netherlands, Germany and Turkey, despite the deterioration of Jerusalem's relations with Ankara. Exports to China tripled in 2011, reaching $1.85B.
Gas Deals
The partners in Israel's Tamar offshore natural gas field have signed a $750M contract to supply gas to Israel's Hadera Paper Co. The contract is the fifth signed by the group, following deals worth $ 5B with Dalia Power Energies, $1.2M with Maktsehim Agan Industries and two deals totaling $1.2B with Ramat Energy Negev and Ashdod Energy, both private companies. The biggest deal of all, a $17B contract with the Israel Electric Corp., is still pending.
Tamar partners are Noble Energy of the US (36%), Yitzhak Tshuva's Delek Group (31%), Isramco (28%) and Dor Alon Energy (4%).
Eilat Railway Discussed
The cabinet on January 29 began a series of discussions on a proposal to build a new rail line to the Red Sea port-resort city of Eilat. Prime Minister Benjamin Netanyahu said that the project, whose initial cost estimates are in the $2-3B range, would impact Israel's economy for the next 50 years by creating a more convenient link with China and India, the world's fastest-growing economic powers.
Gas Talks
The Israel Electric Corp. is negotiating with the partners in the new Tamar gas field (Yitzhak Tshuva Delek Group, Noble Energy of the US, Alon and Isramco) for the purchase of 1.5-2 billion cubic meters of gas a year, in a deal valued at $4B. East Mediterranean Gas Company currently supplies gas to the government-owned utility company.
Finance & Investment
Top-Rated Deals
Two Israeli deals were on the New York Times list of the 18 most interesting deals of 2011. The sale of pesticides maker Makhteshim Agan Industries to the China National Chemical Corporation (ChemChina) priced Makhteshim Agan at $2.4B and was one of the biggest deals any Chinese company has ever closed outside China. The other is the sale of Fundtech to the US equity fund GTCR at a company value of $318M. The seller in both deals was Nochi Dankner's IDB Group.
$5 Billion from Tech Exits
2011 was the best year for Israeli high-tech investors since 2006, according to a report in Calcalist, the economic supplement of the Yediot Aharonot newspaper. The paper tallied 58 mergers, acquisitions and public offerings during the year, creating revenues of $5.12B. Largest acquisitions were of digital advertising enabler MediaMind by DG for $517M and the $484M acquisition of chipmaker Zoran by CSR.
Meanwhile, Globes reported that Israeli interested parties, including company officials, realized about NIS 3B ($800M) from exits on Wall Street over the course of 2011. Largest by far was the $351M from SodaStream, to the Fortissimo Fund, Kendray Properties, Keswick Properties and Real Property Investment.
Start-Up Funding Up
Israeli start-ups raised $2.14B in 2011, an 11-year high, 70% more than the $1.26B raised in 2010, and 91% more than the $1.12B raised in 2009, according to the quarterly survey of the IVC Research Center and KPMG Somekh Chaikin. According to the survey, 546 start-ups raised new capital in 2011, up from 2010's 391.
Fimi Gets High Rating
Fimi, the Tel Aviv-based mezzanine private equity fund founded by Yishai Davidi, was ranked fourth in the world in a 2011 rating of 5,700 equity funds conducted by Prequin, a US alternative assets intelligence specialist Fimi, the only Israeli fund in operation long enough to be rated, had an IRR (Internal Rate of Return) of 31%. Several non-Israeli funds that invest in Israel were also rated: TPG, with holdings in the Strauss coffee business, had an 18% IRR; Apax Europe VI, which purchased the Tnuva food distributors in 2007, 9.6% IRR; and Apax V, a partner in Bezeq Telecom, 28.9%.
Cyber-Ark Raises $40 Million
Israeli-American Cyber-Ark Software has raised $40M in a December financing round led by Jerusalem Venture Partners and Goldman Sachs. Founded in 1999, Cyber-Ark develops solutions for protecting applications and sensitive data against both internal and external threats, on the principle of a digital safe.
End of an Alliance
American businessman Louis Pell has brought suit against his former partner Prof. Shlomo Ben-Haim over about $60M worth of Johnson & Johnson shares and dividends he claims Ben-Haim withheld from him. Pell and Ben-Haim, who is one of Israel's leading technology entrepreneurs, had worked together since 1993, when they founded Biosense, a developer of mini-sensors for diagnosing cardiac problems. They were also partners in Medinvest, a holding company for nine medical technology companies.
Kenshoo for Sale?
Venture capital firm Sequoia is exploring possible buyers for Tel Aviv-based Kenshoo, whose technology accelerates and enhances Internet advertising campaigns. Calcalist says that the asking price is based on a company valuation of $300-400M. The technology of Kenshoo, which also has offices in San Francisco, searches Internet traffic, marketing and advertising and social media for prospective clients.
Israel Ports-Indian Port Contract
A consortium of Israel Ports and India's Cargo Motors has won a contract to build a container port at Nargol, about 150 km. north of Mumbai. Initial investment in the project is estimated at $600M. About 18 groups initially expressed interest in the port project.
India as an Export Hub?
A free trade agreement between Israel and India will turn India into a hub for Israeli exports to the Middle East and other Muslim countries, an Indian banker said in late January. A. Purushothoman, CEO of the Israel branch of the State Bank of India, told a seminar at Tel Aviv University that India could be a gateway to Arab countries with which Israel has no relations, as well as Muslim Malaysia and Indonesia.
Diamond Mine IPO Mooted
Israeli businessman Benny Steinmetz intends to float shares of Octea, his Sierra Leone diamond mine holding company, on the Hong Kong Stock Exchange at a value of $2-3B, according to a report in London's Financial Times. The Koidu mine is expected to produce 500,000 karats of diamonds in 2012.
Mergers & Acquisitions
Akamai-Cotendo
Akamai Technologies, a specialist in accelerating Web content, has purchased Cotendo of Netanya, north of Tel Aviv, and Sunnyvale, California, for a reported $268M. The technology of Cotendo, founded three years ago, is designed to use “cloud-computing” to speed up the flow of data. It will be the first Israeli purchase for Cambridge, Massachusetts-based Akamai, though the main developer of the company's basic technology was Israeli-American mathematician Daniel Lewin. Lewin. born in Denver but raised and educated in Israel, was aboard American Airlines Flight 11, one of the two planes that was flown into the World Trade Center on September 11, 2001.
Potash Purchase Delayed
Israel's Antitrust Authority has delayed Potash Corp. of Sasketchewan Inc. deal to increase its 14% stake in Israel Chemicals Ltd. The authority said antitrust consequences of the deal are “under review.” The Finance Ministry, which has already approved the transaction with the Israel Corp., which controls Israel Chemicals, says Potash's offer has been under consideration for six months.
Allot Eyes Flash Networks
Advanced negotiations are under way between Allot Communications, a broadband management specialist, and Israel's Flash Networks. Projected purchase price for the Israeli company is in the $120M range. Allot, traded on Nasdaq and the Tel Aviv Stock Exchange at a market cap of $500M, develops technology that enables Internet service providers and wireless telephony carriers to monitor and manage their bandwidth, using the analysis provided by Deep Packet Inspection (DPI) technology. Wall Street analysts estimate sales of $76M for the company in 2011. Allot reportedly is interested in Flash's wireless networking capabilities.
Dankner Switches Directions
Businessman Nochi Dankner is seeking to switch purchasers in his effort to sell his IDB Holding Corp. holding in Israel's Clal Industries and Investments. In early January, Dankner broke off talks to sell IDB's 60% stake in Clal to Avraham Livnat Ltd., at a company valuation of NIS 3.8B (slightly less than $1B). At the same time, he opened negotiations to sell 40% of Clal to a new potential buyer, Viola Private Equity, which was also held.
Frutarom-Etol Tovarna
Frutarom Industries, an Israeli company whose shares are traded on the Tel Aviv and London stock exchanges, has acquired 56% of Slovenian company Etol Tovarna arom in etericnih olj for €19.6M and plans to make an offer to purchase the remaining shares traded on the Ljubljana Stock Exchange. Etol, founded in 1924, develops, manufactures and markets taste solutions, focusing on natural flavor products for the food and beverage industry. Frutarom, with 1,500 employees worldwide, markets over 20,000 products to more than 10.000 customers in 120 countries, has 45 offices and 27 labs worldwide, and operates 30 production facilities in Israel, Europe, North America and Asia.
Playtech-Geneity
Playtech Cyprus, controlled by Israeli Teddy Sagi, has acquired London-based e-gaming software for lotteries and online bookmaking, for £11M. Geneity's customers include bookmakers Ladbrokes, Betbair, Gala Coral and the British Health Lottery.
IBM-Worklight
IBM has acquired Worklight, a developer of applications for smartphones and tablet computers based in Shefayim north of Tel Aviv. Purchase price was not reported, but was said to be in the $50-$60M range. It was the 11th acquisition of a company based in Israel or with substantial Israeli operations for IBM, which has 1,100 employees in Haifa, Tel Aviv, Herzliya, Rehovot, and Jerusalem. Its largest Israeli acquisition was Storwize, for $140M in 2010.
ATX-Arcos
ATX Networks, a Canadian producer of cable television technology, has acquired Israel's Arcos Technologies for $26M. Based in Petah Tikva east of Tel Aviv, Arcos specializes in solutions for the home video network market.
GE Invests in Check-Cap
General Electric has acquired 5% of Check-Cap, developer of a colon cancer-detector. Price was not announced, but Globes said it was based on a company valuation of about NIS 170M (about $46M). Check-Cap, based on Mt. Carmel near Haifa, produces a capsule designed to compete with the camera-in-a-pill endoscopic technology of Given Imaging, another Israeli firm. Both technologies aim to replace conventional colonoscopy; the difference is that Given uses a camera and a light source while Check-Cap's is based on X-rays and does not require prior colon cleansing. The investment was made through GE's Healthyimagination Fund, and runs parallel to Check-Cap's plan to raise $20-25M in a private placement.
Amobee-Singtel Talks
Acquisition talks are under way between Singapore Telecommunications and Amobee, an Israeli developer of mobile advertising technology. Potential purchase price by the Singapore Company is said to be $300-350M, according to a report in Globes. Amobee, whose customers include Google, Nokia, Skype, and eBay, was named the most promising Israeli start-up of 2008-9 by Globes.
Its investors include Sequoia Capital, Accel Partners, Globespan, Motorola Ventures, Cisco Systems, Telefonica AS and Vodafone.
M&A Outdistances IPO
Mergers and acquisitions far outstripped initial public offerings for Israeli companies in 2011: M&A exits brought in $5.2B, while Imperva, the only major Wall Street IPO (on the New York Stock Exchange) raised $90M. This is in keeping with the trend in the US where M&A's rose by 26% while the number of IPO's declined, points out Globes columnist Batya Feldman.
Teva's India Rumor
Teva Pharmaceuticals has declined to comment on reports that it is a contender to purchase India's Micro Labs Ltd. for about $2B. VCCircle, an Indian website, says that Pfizer and private equity buyout firms are also interested in Micro Labs, a Bangalore-based manufacturer of generic drugs. Previous other large Teva acquisitions include Ratiopharm of Germany in 2010 for $5B and Cephalon last May for $6.8B.
Nestle Increases Osem Stake
Gad Propper, a member of the founding family of Osem, one of Israel's largest food manufacturing firms, has sold his 5% stake in Osem to Nestle for NIS 371M (about $100M). Nestle, which acquired control of Osem in 1995, now holds almost 59% of the firm's equity.
ECI on the Market
ECI Telecom controlling shareholder and chairman Shaul Shani has allegedly again put the Israeli telecommunications equipment firm up for sale to the Russians. A year ago, Shani reportedly offered ECI to Russian President Dmitry Medvedev for $2.5B. This year, the potential buyer is state-owned Rosatom Nuclear Energy State Corporation, and the price is much lower.
According to Russia's Izvestia newspaper, a $5B valuation is being bandied about in a deal that involves merging ECI into Rosatom, though it is estimated that the price of ECI itself as part of a complicated package would be around $500M.
Science & High Technology
Teva's New CEO
Dr. Jeremy Levin, a former senior executive at Bristol-Meyers Squibb, will replace Shlomo Yanai when the Teva Pharmaceuticals CEO retires in May, the company has announced. In his five years as CEO, Yanai took Israel's world-class pharmaceutical company from a business specializing in generic drugs with $8.4B in annual revenue to a more diversified business with anticipated 2012 revenue of $22B and expanded presence in European and Latin American markets.
In late December, Teva announced a $3B plan to purchase back about 8% of its shares at the then-current share price, $42.30 (Teva shares closed at $45.89 on February 2, 2012). Yanai said the purchase reflected the firm's confidence in its long-term prospects.
Tremor Treatment Trial
InSightech, controlled by Israeli businessman Motti Zisser's Elbit Medical, has reported success in the safety and efficacy clinical trial of its ExAblate 4000 focused ultrasound treatment for the treatment of essential tremor. The trial was for 15 patients at the University of Virginia School of Medicine. The ExAblate 4000 is also involved in clinical trials for the treatment of chronic neuropathic pain and on brain tumors, in preclinical studies of the system for the destruction of blood clots, which cause strokes, and for the delivery of medication to the brain. InSightech is based in Tirat Hacarmel, near Haifa.
Prize-Winners
Jimmy Levi and Inis Said, respectively the founder and CEO of Nazareth-based Galil Software, have been named winners of the Prime Minister's Prize for Initiatives and Innovation in the for-profit sector. The four-year-old firm was cited for its pioneering work in changing the employment map for young engineers in the Israeli Arab sector. It employs more than 140 technology professionals.
Vegas Presence
More than 30 Israeli companies showed their wares at CES 2012, the annual electronic gadgetry show held in Las Vegas in early January. Among them were Siano, maker of mobile TV receiver chips for tablets and cellphones; Jinni, developer of voice-controlled video games; Lumus, maker of video-receiver eyeglasses; PrimeSense's gesture-control of video devices; and wireless-rechargable cellphone batters from Powermat.
Record Year at Checkpoint
CheckPoint Software, Israel's world-class developer of firewall Internet security systems, set records in 2001. Its revenue rose 14% to $1.25B from $1.1B in 2010. GAAP (Generally Accepted Accounting Principles)-based and net profit rose 20% to $544M ($2.54 per share) from $452.8M in 2010, and non-GAAP net profit rose 16% to $613.6M ($2.87 per share) from $528M. The figures topped predictions by analysts.
ALS Advance
Brainstorm Cell Therapeutics, based in Petah Tikva and New York, announced positive interim results in Phase I clinical trials on its stem-cell treatment of Amyotrophic Lateral Sclerosis (ALS, also known as Lou Gehrig's Disease). The trial showed improvement in the patients' ability to breathe and swallow. Muscular function also improved. There is still no known cure for ALS, a terminal disease.
Intel Reshuffle
Mooly Eden has been named as the new general manager of Intel Israel, according to a report in Globes. The chipmaker's current GM, Maxine Fassberg, will be in charge of relations with the Israeli government, a post subordinate to that of Eden, the former head of Intel's Haifa R&D center.
Mobli's Celebs
Cycling icon Lance Armstrong, seven-time winner of the Tour de France, has entered into a collaboration with Mobli, an Israeli start-up. Armstrong's activities, in training and as head of a foundation assisting cancer patients, will be featured on the photo-and-video-sharing service being developed by Mobli, and will join the company's board of director. A few months ago, actor Leonardo DiCaprio joined Mobli as an investor and marketing consultant.
Aerospace & Defense
US Missile Aid
In the midst of its drive for budget cuts, US Congress voted to allocate $235M for continued development of Israel's David's Sling and Arrow 3 anti-missile systems. In addition, the annual $3B defense aid allocation to Israel will remain untouched.
David's Sling, developed by Rafael Advanced Defense Systems and Raytheon, is designed to counter short and medium-range rockets and missiles; when it becomes operational, Israel Aerospace Industries' Arrow 3 will be able intercept incoming ballistic missiles in space.
IAI's Nissan to Step Down After Negotiating $1.1 Billion Deal
Israel Aerospace Industries CEO Yitzak Nissan will step down at the end of the year, when his contract expires, according to a report in Globes. Relations have been tense for some time between Nissan, 66, and Dov Barahav, chairman of government-owned IAI, who questions Nissan's ability to lead the defense contractor through the process of privatization and to mix the company's thrust on defense with commercial products.
Nissan reportedly led IAI's successful negotiation of a just-announced $1.1B sale of missiles, anti-missile missiles and unmanned aerial vehicles to an unnamed Asian country, not India. A second stage deal will increase total value of the deal to $1.6B, according to Globes.
IMI Privatization Advances
A plan for the privatization of government-owned Israel Military Industries is due to be presented to the Finance Committee of the Knesset, Israel's parliament, before the end of March, according to a report in Globes. Under the plan, the defense contractor will be offered for sale as a single unit, and will include the dismissal of 950 employees. Possible bidders for IMI include Elbit Systems, Israel's largest private defense contractor; the SK Group and Plasan Sasa Ltd., the armored vehicle specialist owned by Kibbutz Sasa, on Israel's northern border. Israel's two other government-owned defense contractors, Israel Aerospace Industries and Rafael Advanced Defense Systems, will not be permitted to place bids. According to Globes, the Histadrut trade union federation has agreed to the deal.
Turkey Contract Cancelled
Elbit Systems and Israel Aerospace Industries have been ordered to cancel a contract to supply airborne intelligence-gathering systems to the Turkish Air Force. The Defense Ministry cited “diplomatic considerations” when giving notice that it would not renew export licenses necessary to fulfill the contract, which was signed by Elbit's El-Op unit and IAI's Elta in 2009.
A few weeks after the cancellation, Elbit signed a $50M contract to supply the Hermes 900, its largest unmanned aerial vehicle, to an unnamed South American country.
Rafael's US Award
The US Department of Defense has awarded Israel's Rafael Advanced Defense Systems with a Certificate of Appreciation for its continued support of American operations in Iraq and Afghanistan. The certificate called Rafael “an outstanding industry partner in the production of Reactive Armor for the Stryker and Bradley Fighting Vehicles,” citing the Israeli defense contractor's “contribution to the survivability of the United States service members in harm's way, and to its commitment to delivering quality hardware in an expeditious manner, leading to unmatched support to the warfighter.”
French Offer Heron to NATO
France is offering the Heron, jointly made by Israel Aerospace Industries and Dassault Group Sa, to NATO as its contribution to the alliance's Ground Surveillance Program, according to a report in Defense News. The Heron is a medium-altitude, long-endurance (MALE) UAV.
Maneuvers Postponed
Operation Austere Challenge 12, the largest-ever joint US-Israeli military exercise, has been postponed at Israel's initiative, according to reports from the Jewish Telegraph Agency and The Atlantic, a US magazine. The reason given, according to the reports which were quoted in the Globes, was budgetary. The exercise, due to take place in the Negev in the coming months, was to involve about 5,000 soldiers from both countries in various ballistic-missile defense scenarios.
AMOS 5 Operational
Spacecom, controlled by the Eurocom Group of businessman Shaul Elovich, began commercial operations in late January. Built by Russia's Information Satellite Systems, Amos 5 is Spacecom's first satellite not built by Israel Aerospace Industries, a former shareholder in Spacecom.
Launched in mid-December, Amos 5 covers Africa, Europe and the Middle East and has a 15-year anticipated lifespan.
Arrow Partnership
Israel Aerospace Industries and Boeing have marked the 10th anniversary of their collaboration on the Arrow anti-missile missile program with a new agreement to develop missile-defense opportunities. IAI is the prime contractor for Arrow, the world’s first operational national missile defense system. Together with Boeing, it is already developing the next-generation Arrow 3.
Arrow to Korea?
The Defense Ministry has denied a report in the usually authoritative Defense News magazine claiming that South Korea could become the first foreign export for made-in-Israel Arrow missile defense systems. The potential deal, if it materializes, would make Seoul the first foreign customer for Arrow, versions of which are already operational in Israel. The Arrow is manufactured by IAI and Boeing, who are also developing the longer-range Arrow 3, capable of intercepts outside the Earth's atmosphere.
India is another potential customer for the Arrow; possible sale of the system has already been authorized by the US and Israel.
Italian Inducement
Italy has improved its chances of winning an Israeli Air Force contract for jet trainers by agreeing to cooperate on the development of a new Israeli intelligence satellite, according to a late-January report in Globes. The Alenia Aermacchi
M-346 trainer and the T-50 Golden Eagle, made by a Korean Aerospace Industries-Lockheed Martin partnership, for the trainer contract.
Allot Cleared
An Israeli Defense Ministry investigation has concluded that Allot Communications did not know its Internet monitoring software equipment had been sold to Iran. The Bloomberg news agency reported late last year that the sale of deep-packet inspection technology to monitor e-mail and Internet messages had been made through a Danish distributor.
Human Error Caused Heron Crash
Ground controllers apparently exceeded the test flight parameters of a Heron UAV, one of IAI's flagship products. The top-secret Heron, which costs about $10M and is called Eitan in Hebrew, is a fourth-generation medium-altitude system featuring fully automatic take-off and landing, deep-penetration capabilities for real-time intelligence gathering capable of carrying payloads of up to 250kg. The Israel Air Force has been operating the Heron, which is capable of staying aloft for 52 hours. The crash occurred shortly after take-off from the base of UAV Squadron 20 at Palmachim, on the coast south of Tel Aviv.
Radio Days
The Israel Defense Forces has upgraded its tactical communications infrastructure with the purchase of a variety of encrypted devices capable of transferring data from Elbit, the Israeli private defense contractor. The devices supplied to the IDF Ground Forces Command over a four-year period include Elbit's CNR-70, which has encryption and anti-jamming capabilities and can quickly hop between a wide range of frequencies.
Reciprocal Purchases
Representatives of General Dynamics Land Systems met with Israeli companies in mid-January, to discuss a $160M offset purchases the US contractor is obligated to make as part of its contract to produce the body of Israel's Namer armored personnel carrier in the US.
Galant is Back to Sea
Yoav Galant, whose appointment to be IDF chief of staff failed to be ratified, has a new job. The retired major-general has been named chief executive of Nammex, a private exploration company owned by Israeli mining magnate Benny Steinmetz. Nammex, formerly known as Scorpio Gas and Oil Exploration, owns 42.5% of six offshore drilling licenses near the Leviathan, a proven gas discovery.
