Arie Egozi/TEL AVIV
Defence manufacturers Elbit Systems and Elop have revealed plans to merge in a move that marks the beginning of consolidation within the Israeli defence and aerospace industries.
Elbit reports that it is in negotiations with Elop following the authorisation of discussions by its board. Israeli sources say the pair "are very serious about doing a deal", and the talks are expected to be completed by August.
Elbit president Joseph Ackerman says the merger is part of the company's strategy of enhancing its capabilities to better compete in the global market. Elop president Jacob Toren says the two companies are well placed for merger in that they manufacture complementary systems.
Haifa-based Elbit specialises in the manufacture of advanced avionics and helmet-mounted sights. In recent years it has expanded into the aircraft upgrade market, specialising in the Northrop F-5, Mikoyan MiG-21 and Romanian Puma helicopters, built under licence from Aerospatiale Matra.
The company, which was founded in 1966 and is listed in the USA, has been on the acquisition trail recently, agreeing to buy US-based International Enterprises and fellow-Israeli company Cyclone Aviation Products to strengthen its upgrade capabilities. Elbit had sales of $415 million last year.
Privately owned Elop - previously Electro-Optics Industries - was founded in 1937. It is based at Nes Ziona, north of Tel Aviv. The business specialises in advanced aerial photography systems, stabilised observation systems, laser designators and head-up display systems. It posted sales of $300 million in 1998.
Sources at the two companies confirm that the merged entity will be a potential buyer for parts of Israel's state-owned defence manufacturers when they are offered for sale. Israel Aircraft Industries (IAI) and Israel Military Industries, together with weapons manufacturer Rafael, a division of the Israeli defence ministry, are all to be moved towards privatisation over the next few years.
The new company is being tipped as a likely buyer for parts of IAI and the missiles business of Rafael, although the pace of privatisation will depend on the new Israeli Government's willingness to confront overmanning.
Source: Flight International
