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  • Elbit Acquires MIKAL group Subsidiaries
    Posted by Noam Eshel 3:59 PM on Sep 02, 2010

    Elbit Systems announced today the acquisition of the three defense companies owned by the Israel-based Mikal group for a net payment of $69 million. These companies include artillery and mortar producer Soltam, armored vehicle refurbishing expert Saymar and EO specialist ITL.

    Following a significant setback over a major export program, striving for cash, Mikal sold 19% of its share to Elbit for a loan of $18 million. This was only the first step; Mikal expected Elbit to further raise its ownership of the entire group but Elbit preferred to pick only the companies considered to be synergistic to its activities, rather than acquiring the group as a whole.

    The synergies provided by this acquisition are significant, particularly in the case of Soltam, offering Elbit direct access to the market of main weapon systems. Soltam is one of a few companies playing a prime contractor role in international programs, offering artillery and mortar systems.  In the past Elbit worked with Soltam as a subcontractor, offering mortar fire control computers, but did not have the benefit and advantages available to a prime contractor.  This position will benefit Elbit Systems in competing for domestic and international programs, being able to maximize profitability, and control of such programs. Another new activity for Elbit is ammunition (also produced by Soltam) – so far Elbit avoided this field and focused on enhancing weapons produced by other manufacturers into ‘smart weapons’.

    The synergies with ITL are more complex, as this company has been competing with Elbit in many strategic activities, particularly in electro-optical systems for dismounted operations, sights and target acquisition systems. Following the acquisition, Elbit is expected to merge ITL’s legacy non-competing specialties including image intensifiers (I2), laser markers and range-finding as synergistic to its activity, but could be reluctant to accept ITL's full portfolio, maintaining two parallel product lines. Besides their fierce competition, the two companies have also worked together – in Israel ITL’s eyepiece is operationally used as part of the Elbit Systems Dominator solution for the IDF’s future soldier program.

    Tags: ar99, Israel, Elbit

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