Business in Brief: November 17

GDP growth stronger than expected; Juniper to close R&D center; IDB execs. in China for Makhteshim talks; Tamar’s value cut 60%.

Breaking news (photo credit: JPOST STAFF)
Breaking news
(photo credit: JPOST STAFF)
GDP growth stronger than expected
Gross domestic product grew at an annual pace of 3.8 percent in the third quarter, well above analysts’ predictions of 2.5%-3%, the Central Bureau of Statistics reported Tuesday. This follows 4.5% growth in the second quarter and 3.9% growth in the first quarter. Business output grew 3.9% in the third quarter, after climbing 5.1% in the second quarter and 4.8% in the first quarter. Imports of goods and services fell 4.6% in the third quarter after rising 5.9% in the second quarter.
The rise in GDP reflects an increase in public expenditure and investments in fixed assets. On the other hand, there was a modest rise of 1.3% in private consumption and a 9.6% fall in exports of goods and services, after 13.9% growth in the preceding quarter. Industrial exports, excluding diamonds, were down 5% in the third quarter, diamond exports decreased 27.2%, tourist services dropped 42.9%, agricultural exports fell 44.2%, and other services (mainly software, R&D and transport) were down 12.3%.
Juniper Networks to close R&D center
Juniper Networks Inc., which produces high-speed switching routers, is closing its development center in Herzliya and laying off 50 employees, it announced Tuesday. After the closure, Juniper will only retain several dozen employees in Israel.
The R&D center in Herzliya formerly belonged to Israeli start-up Kagoor Networks, which was acquired by Juniper in 2005 for $67.5 million. But the acquisition has been considered a failure, and it was expected that Juniper would change its strategy toward its Israel development center.
IDB execs in China for Makhteshim talks
IDB Holding Corp. executives are currently in China, as talks on the sale of subsidiary Makhteshim Agan Industries to China National Chemical Corporation (ChemChina) continue, people familiar with the matter told Globes Tuesday. A deal may be near, as market sources believe the Chinese government will soon authorize it.
In mid-October, Makhteshim reported that it was in talks with ChemChina on a deal in which ChemChina would buy 70 percent of Makhteshim at a company value of $2.72 billion. The stake would consist of 17% bought from IDB subsidiary Koor Industries and the public’s entire stake. Koor would retain the other 30% of Makhteshim, which would be a private company controlled by ChemChina. Nochi Dankner is the controlling shareholder of IDB.

Sheshinski cuts Tamar’s value 60%
The new tax model proposed by the interim recommendations of the Sheshinski Committee will lower the value of the Tamar gas field by 60 percent according to calculations attached to the committee’s report. The calculation is based on data from very similar fields to Tamar with similar quantities of gas, prices and costs of exploration.
According to the calculations, if the tax model is implemented, the net value of Tamar will fall from about NIS 23 billion to NIS 9.15b. The model assumes company tax of 18% and a maximum new tax of 60%.