Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) does not intend to continue competing against Rafael Advanced Defense Systems Ltd. for the acquisition of UAV manufacturer Aeronautics Ltd. (TASE:ARCS), sources close to IAI management have told “Globes.” The sources explained that the price settled with Rafael for the acquisition was unrealistically high, and that IAI was unwilling to match it.
According to the sources, the letter sent by IAI demanding an auction for the sale of Aeronautics preceded the letter sent several days ago stating that a deal for the acquisition of Aeronautics by Rafael and businessperson Avichai Stolero for NIS 850 million had been signed. The sources added that as soon as a deal at this price was signed, IAI’s opposition was no longer relevant, because the price was unrealistic. “According to our information, IAI was willing to pay NIS 600 million and not a shekel more,” a source close to IAI management told “Globes.”
Defense market sources expressed surprise in the past 24 hours that IAI expressed opposition to the deal, saying that it was not really interested in acquiring Aeronautics, and that its main motive was to either inflate Aeronautics’s value and make Rafael pay more for it, or to prevent the deal altogether.
Sources close to the IAI deny these allegations, claiming that IAI had been interested in the acquisition, even though IAI has its own UAV unit, because Aeronautics manufactures small UAVs, in which IAI has no expertise. It is clear, however, that IAI cannot make the acquisition at any price, and certainly not at the high price set in the deal signed.
Rafael and Stolero will begin exclusive negotiations to complete the deal, including due diligence, next month.
Published by Globes, Israel business news – en.globes.co.il – on January 14, 2019
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