elbit logo 88.
(photo credit: Courtesy)
“It is impossible to see an end to the crisis at Israel Military Industries Ltd.
(IMI), and that’s sad. It will continue through the coming year, when the
election season will begin, and no fundamental decision will be made. In any
case, the attempt for a merger with Rafael Advanced Defense Systems Ltd. is a
Rafael isn’t ready to merge with IMI; it’s taken on too big a
nut – and is choking,” ImageSat International NV chairman David Arzi told
ImageSat is jointly owned by Israel Aerospace Industries Ltd. and
Elbit Systems Ltd.
“If someone wanted a real solution to the problem of
IMI through a merger with another company, he would have found it through a
merger with IAI. Rafael is a kind of start-up that is now moving from the set-up
stage to the formalization stage. It needs at least ten years to accumulate the
shareholders’ equity and reserves that IAI already has,” Arzi
“That is why IAI could more effectively lead a merger without
making the demands that Rafael is making. If IAI had been allowed to lead the
merger, it would dismantle IMI and scatter its units among IAI’s divisions with
synergetic operations. Some parts of IMI could have gone to IAI subsidiary Elta
Both IAI and Elbit Systems wanted to take over IMI or large
parts of it, along with other defense companies, such as Kibbutz Plasan
Sasaowned Plasan Industries Ltd.
Earlier this year, a joint team from the
Finance Ministry and the Defense Ministry decided to merge government- owned IMI
with government- owned Rafael, and to swear that, this time, the deal was
serious. However, in the months since, nothing has happened.
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suspicions and Rafael’s deep worries about IMI’s financial condition and
liabilities, and the lack of clarity about the government’s willingness to
provide the money needed to close IMI’s hole, as well as the issue of
privatization, have stymied the merger.
Meanwhile, IMI is paying NIS 60
million a month in salaries to its 3,000 workers from Defense Ministry advances
on future company earnings. The Defense Ministry says that, as part of the
merger agreement, this burden should have been shifted to the Finance Ministry
and Rafael, in equal shares, at the end of June.
At the same time, IMI’s
information room and details about its finances, liabilities, orders backlog,
and so on, would be made available to Rafael. The Defense Ministry claims that
although the information room was ready in time, the Government Companies
Authority has not opened it. Moreover, the Government Companies Authority and
the Histadrut Labor Federation have reopened the issue of IMI’s
Meanwhile, sources claim that Rafael has made exorbitant
financial demands of the Finance Ministry to guarantee its financial stability
following the merger with IMI. Rafael denies the charges, saying that it has not
asked for a dime.
“How can we ask for something, when we don’t know what
to ask for? The information room has not been opened. We need to know IMI’s
financial condition, see the holes and traps that IMI knows about. We don’t want
to step on a mine. Afterwards, we may ask for NIS 1 billion, or NIS 20 billion,
We want to know what we’re getting into. We’re a responsible
company,” said a Rafael source.
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