General News Summary
Coalition or Chaos?
Benjamin Netanyahu and Benny Gantz have agreed to begin coalition talks in the wake of a September 17 election that neither of them was capable of winning. Will the talks, at the initiative of President Reuven (Ruby) Rivlin after mandatory consultations with all 120 members of the newly-elected parliament, end quickly with a coalition agreement or drag on for months with each leader clinging to the alliances of the election campaign and their oft-repeated and often mutually exclusive principles?
Either way, the discussions pit Netanyahu, the veteran political pro, against Gantz, a novice and former IDF chief of staff who heads the centrist Blue White that came together as a political party less than a year ago. Each has a bloc of parties lined up behind him, neither has 61 seats in the 120-member Knesset necessary to create a sustainable governing coalition.
Netanyahu is backed by 55 recommendations from his own Likud, the ultra-Orthodox Shas and United Torah Judaism and right-wing alliance Yamina. Gantz has 54 – from his party, from Labor-Gesher’s six representatives and the Democratic Union’s five and from the Arab Joint List. The balance is in the hands of Avigdor Lieberman, the former defense and foreign minister who brought about the second election by refusing to join Netanyahu’s coalition after the first elections, in April, and insists that both major parties join forces with his Yisrael Beitenu in a secular unity government that excludes the ultra-Orthodox parties.
With neither side holding a clear majority, successful construction of a sustainable coalition could happen if the big parties compromise, or if elements from either side were to defect and join the other camp’s coalition. The immediate probabilities for that happening are slim, among other things because many of the component parts of the two sides simply don’t mix and match.
For one thing, Netanyahu has forestalled much of the possible maneuvering with his insistence that his supporters, all 55 of them, negotiate as a bloc, a condition that Gantz reportedly ignored when he said that current contacts are with the Likud alone and that he’s not negotiating with Shas, UTJ or Yamina. Then there’s Lieberman’s apparent vendetta against the ultra-Orthodox Shas and United Torah Judaism, and on the other side his negation of cooperation with Arab parties he has called “enemies of the state.” Then there’s the long-standing animosity between Yair Lapid, one of Blue White’s top leaders, and UTJ’s Yaakov Litzman, who pledged not to be part of a Netanyahu coalition in which Lapid was included.
At the same time, the endorsement of Gantz by the Joint List, a coalition of four predominantly Arab parties, marked the first time since 1992 that Israeli Arabs had gone on the record to support a priministerial candidate. One of the four, the ultra-leftist nationalist Balad, did not take part in the endorsement. List leader Ayman Oudeh said that his community was no longer willing to be edged out of the political process, and that that the only future for Israel is a shared future which includes Israel’s more than 1 million Arab citizens.
Whichever candidate Rivlin is to choose has 28 days, with the possibility of getting a 14-day extension, to present a coalition and win a confidence vote in the Knesset. If that fails, the president may assign the task to a different MK. The process is expected to take considerable time, perhaps all the way to another impasse necessitating a third election to accomplish what the first two failed to do.
The whole picture may change sometime after the October 2-3 hearing where Netanyahu’s defense team will try to dissuade the prosecution from indicting Netanyahu in four cases involving fraud, breach of trust and other alleged offenses. After that, the decision to indict or not, in the hands of State’s Attorney Avichai Mandelblit, would change the rules of the game. Though under existing law, a prime minister who is indicted but has not been convicted can remain in office, the Likud might do the unthinkable under other terms and decide to replace its long-time leader and move ahead in coalition efforts with someone else in the top spot.
Eye on the North
Recent events in Lebanon, Syria and Iraq have focused attention on Israel’s shadow war against the Iranian threat along its northern border. Attacks attributed to Israel include interception and destruction of an Iranian Revolutionary Guards-ordered team getting ready to launch a drone attack on Israeli forces in the Golan Heights, continued interception of advanced arms shipments to Iran’s Hizballah surrogate in Lebanon and destruction of equipment designed to increase the precision of rockets already in Hizballah’s arsenal.
The U.S. has tacitly supported Israel’s long-held view that an increased Iranian presence along or near its northern frontier as a strategic threat. President Donald Trump’s readiness in principle to meet Iranian President Rouhani have raised apprehensions in Jerusalem that such a meeting might lead to reduction of pressure against Teheran’s nuclear program and its support of terror against Israel.
While not directly referring to prospects of a U.S.-Iranian dialogue, Prime Minister Benjamin Netanyahu made his misgivings about it very clear in a late-August comment. “Iran is acting in a broad front to produce murderous terror attacks against Israel,” he said, adding that “Israel will continue to defend its security by any means necessary.”
A delicate balance is demanded of Israel. On one hand, it is imperative that sophisticated Iranian arms be kept as far as possible from its borders, where there are reportedly tens of thousands of rockets in Hizballah’s arsenal. On the other, it can ill afford angering the Trump administration by being seen as deliberately disrupting any move towards Iran-U.S. negotiations on nuclear arms.
Mysterious Gulf Jets
Several jet aircraft with mysterious Gulf connections have made Israeli headlines in late summer, but so far there has been no official report on the nature of the connection. One of the cases concerns two executive aircraft in the possession of the United Arab Emirates, which according to a report in Haaretz, were obtained by the Arab state, with which Israel has no formal relations, through an intermediary, Israeli businessman Matti Kochavi. Other reports suggest that the planes are equipped with intelligence-gathering equipment, and that one of them was delivered to the UAE about a year ago.
In parallel, Haaretz reported in early September that a Boeing 737 owned by DP World, a Dubai-based international logistics and shipping company, has become a frequent visitor at Ben-Gurion International Airport. Haaretz suggested, without further attribution, that the jet’s presence is linked to a senior UAE political figure who may be receiving medical treatment in Israel.
Cellphone Spying Denied
Prime Minister Benjamin Netanyahu has labeled as “a complete fabrication” a report that Israel planted surveillance devices near the White House. The report on the Politico website quoted three former U.S. officials and said that the devices, known as StingRays, were designed to emulate normal cell towers to get information from cellphones in their immediate vicinity.
Israel’s economy grew by 3.6% on an annualized basis in the first half of 2019, according to revised figures published by the Central Bureau of Statistics in mid-September. This compares with 2.8% in the second half of 2018 and 3.5% in the first half of 2018.
Jobless Rate Up, Down
Israel’s unemployment rate rose sharply in June, jumping to 4.1% compared to 3.7% in May. The jobless rate bounced back to 3.7% in July, according to the Central Bureau of Statistics.
Israel had a record 2.8 million tourists in the first 7 months of 2019, according to Central Bureau of Statistics released in early August. The figure was 11% higher than January-July 2018.
S&P, the international credit rating agency, has left Israel’s sovereign rating unchanged at AA, with a stable outlook, despite the political instability connected with upcoming elections and the country’s oversized fiscal deficit. Broad political support for a responsible fiscal policy, S&P said, allayed concern over the fact that debt-to-GDP was rising for the second year in a row.
Another rating agency, Fitch, affirmed Israel’s sovereign rating at A+ with a stable outlook. Fitch said the rating balances strong external accounts, robust macro-economic performance and institutional strength with a ratio of government debt to GDP that is still high in comparison with peer countries, and political and security risks.
Huge Solar Project
Commercial operation of the Ashalim solar energy project have begun and the facility is supplying enough clean energy to the Israeli grid to meet the needs of 70,000 households, according to a report in Globes. The Ashalim plant is operated by Negev Energy, owned by Shikun & Binui Energy (50%), Noy Infrastructure Fund (40%) and TSK of Spain (10%).
The 988-acre plant is composed of some 16,000 parabolic troughs and about half a million concave mirrors, using the thermal-solar system to create steam used to generate electricity. A unique system that uses salt to store energy allows the plant to continue producing electricity for as much as four hours after sunset.
Korea Free Trade Agreed
Israel and South Korea completed talks on a free trade agreement between the two countries in late August, without signing a formal agreement. Talks had been going on for some time over Seoul’s insistence that goods produced in the West Bank, the Golan Heights and East Jerusalem not be given duty-free status. Trade between the two countries totaled $2.5B in 2018, up 15% from the preceding year.
Friedman New Leumi CEO
Hanan Friedman has been named as CEO of Bank Leumi, replacing Rakefet Russak-Aminoah. The new CEO formerly headed Leumi’s Strategy and Innovation Division.
Eran Saar is the new CEO of the IDB Development/Discount Investment Group. Saar, who is 47, led the commercial development of the Tamar gas reservoir as CEO of Isramco Negev 2.
Bezeq, the Israeli telecom, reported second quarter losses of NIS 1.2B; in the second quarter of 2018, Bezeq registered a NIS 195M loss. The telecom now anticipates a loss of around NIS 1B for all of 2019.
El Al Profit
Second quarter profit was up 7% at El Al, Israel’s largest national air carrier, on revenues of $84M. Lower fuel prices, a stronger shekel and the fact that the lucrative Passover travel period took place entirely in the second quarter were cited as reasons for the strong performance.
RE Deals Rise
Activity on the real estate market has increased, according to a report in Globes. The paper said that 54,000 deals completed in the first half of 2019 represented 8% more than in the first half of 2018 and 6% more than in the first half of 2017.
Electric Train Test Run
An electric train has successfully completed a first trial run on the Tel Aviv-Jerusalem line in early September, traveling from the Hagana Station in Tel Aviv to Jerusalem’s Yitzhak Navon Station. The run’s purpose was to locate potential problems ahead of full operation before the end of the year. The electric line was due to have opened in April 2018 but only came into partial service 11 months ago.
Visitors from India
About 1,200 senior real estate executives from India were in Israel in mid-July to attend a conference sponsored by CBRE India.
Women’s Delegation from India
A delegation of 62 women entrepreneurs from India recently visited Israel. The delegation was headed by Harjinder Kaur, CEO of Comvision (India) Pvt. Ltd. specializing in smart transportation and accessible government.
Finance & Investment
A Jerusalem court has approved a U.S. Security and Exchange Commission request to allow questioning of Israeli citizens as part of an investigation into alleged insider trading connected to Intel‘s $15.3B acquisition of Jerusalem-based Mobileye in 2017. The SEC is conducting two investigations, one involving U.S. citizens and another involving Israelis, for possibly making millions of dollars in insider trading after receiving a tip about the acquisition during confidential pre-sale negotiations.
Two Israeli banks reported rises in profits for the second quarter of 2019. Bank Leumi, one of Israel’s two largest financial institutions, registered a quarterly profit of NIS 923M ($259M), compared with NIS 903M ($253M) in the same period last year. Israel Discount Bank, the third largest, said QII profit amounted to NIS 545M, up 29% from NIS 423M in the second quarter of 2018.
Profits of another member of Israel’s “big three,” Bank Hapoalim, declined by 5.3% in the second quarter to NIS 871M from NIS 920M in the corresponding quarter of 2018. Much of the change was attributed to closing of the bank’s international private banking operations.
International Flavors and Fragrances has informed the U.S. Department of Justice about possible bribery involving Frutarom, the Israeli company for which it paid $6.4B in 2018. According to the report, the case involves improper payments made by two Frutarom businesses operating principally in Russia and Ukraine.
Delek Going Ahead on Chevron
The Delek Group plans to go ahead with its $2B planned acquisition of Chevron North Sea whether or not a partner is found, Delek controlling shareholder Yitzhak Tshuva said in mid-August. Delek’s Ithaca unit will acquire 10 fields in the North Sea with estimated reserves of 270 million barrels of crude.
Israel ranked fourth in the cumulative value of all start-up exits – and first internationally – in a survey conducted by Founder Collective, a Massachusetts-based seed-stage venture capital fund. The list was headed by Silicon Valley, with a total valuation of $956B. Trailing far behind were the Boston area and Los Angeles, each with a total of just over $59B, and Israel, with $56B. On the international listings. Israel was ahead of Sweden, $48B, and Canada, $47B.
Worth a Billion
Lightricks, a Jerusalem-based developer of several subscription-based content creation apps, has secured $135M in series C funding at a $1B valuation led by Goldman Sachs, with participation from Insight Partners and ClalTech. Lightricks, whose developers include four PhD students, focuses its R&D on computational photography techniques and maintains a mobile advertising platform that taps algorithms to predict the cost required to secure spots on best-selling app lists.
Mergers & Acquisitions
Salesforce, the U.S. technology giant, is purchasing Clicksoftware, a developer of logistical customer-service management systems based in Petah Tikva, east of Tel Aviv. The price, subject to regulatory approval in the U.S. and Israel, is $1.35B. The seller, San Francisco-based Francisco Partners, paid $438M when it purchased Clicksoftware and delisted the company from NASDAQ in 2015.
Vonage, the New York-based specialist in cloud communications, has purchased the assets of Over.ai, a Tel Aviv artificial intelligence firm which develops voice AI technology for call centers. Financial details were not disclosed.
Generation Capital, a Tel Aviv Stock Exchange-listed investment fund specializing in infrastructure, has purchased control of Solegreen for a reported NIS44M. Solegreen, based in Herzliya north of Tel Aviv, builds and maintains solar electric generating faculties using photovoltaic technology.
Amdocs, the provider of services to international communications companies with bases in the Ra’anana-Kfar Saba area north of Tel Aviv and Chesterfield, Missouri, has acquired TTS Wireless for $50M. The network engineering services provided by TTS of Marousi, Greece, when incorporated into Amdocs’s Open 5G portfolio, will help operators deploy advanced networking services.
Siemens Healthineers is purchasing Corindus Vascular Robotics for $1.3B. Corindus, an Israel-linked developer of robotic medical devices for vascular procedures, is based in Massachusetts. Its founders are two Israelis, entrepreneur Tal Wenderow and Rafael Beyar, a former CEO of the Rambam Medical Center in Haifa, in collaboration with Rambam and the Technion Institute of Technology in Haifa.
Anaplan, an international software firm with headquarters in San Francisco, has acquired Israel’s Mintigo for an undisclosed sum. Mintigo of Kfar Saba in the high-tech belt northeast of Tel Aviv, has combined big data with AI and predictive analytics in an intelligent customer engagement platform for enterprise marketing and sales.
Fast-food giant McDonald’s has agreed to acquire Apprente, an early stage voice-based AI, conversational technology start-up based in Mountain View, California. Apprente was founded in 2017 by two Israelis, CEO Itamar Arel and CTO Moshe Looks; one of its principal investors is an Israeli fund, StageOne Ventures. No financial details were disclosed.
Lucht Probst Associates (LPA), a financial technology developer based in Frankfurt, Germany, has acquired private equity firm Modelity Technologies of Tel Aviv for an undisclosed sum estimated to be in the $20-$30M range. Modelity, established in 2000, provides banks, insurance companies and other financial institutions with a flexible platform for financial modeling and portfolio analytics.
Tricentis, a software testing specialist with headquarters in Vienna, Austria, has acquired Israeli start-up TestProject for an undisclosed sum. TestProject of Petah Tikva, develops cloud-based software testing services.
ISS Selling Israeli Businesses
ISS, the Danish international specialist in facility services, reportedly is selling its Israel businesses for a total of NIS 300M. Buyers are Newrest, the French aviation services firm, and the security and cleaning specialist T&M Group. According to a report in Globes, ISS has operated in Israel since 1999, has 800 local employees, and provides cleaning, maintenance and aviation catering services to a list of clients, including Intel, Teva, Rafael, Applied Materials, Flextronics, Israel Aerospace Industries, the Israel Police, hospitals, airlines, and more.
vCita, a specialist in small business management with offices in Tel Aviv and Seattle, Washington, has acquired WiseStamp for an undisclosed sum. WiseStamp, which has developed an e-mail signature generator for independent professionals, has headquarters in Tel Aviv.
PerimeterX, a Tel Aviv-based developer of technology that identifies and blocks computer bots on the Internet, has acquired Page Seal for an undisclosed sum. Page Seal, which has offices in Nes Tziona southeast of Tel Aviv, develops clients’ defenses against malicious code that protects the customers of Internet e-commerce operators.
Israeli gaming company Playtika has purchased Seriously, a gaming firm based in Helsinki, Finland, for a reported $275M. Headquartered in Herzliya north of Tel Aviv, Playtika has been acquired twice since its founding in 2010: first by Caesars Interactive in 2011 for $90M, and last year by a Chinese consortium, which paid Caesars $4.4B for the company.
Amazon, the U.S.-based international retail giant, reportedly has purchased Israeli storage technology specialist E8 Storage of Tel Aviv. E8 claims its software-based flash storage technology is up to 10 times faster than hardware-based technology currently on the market. Various press reports put the purchase price in the $50-$60M range.
Stage Fund, a U.S. private equity firm with headquarters in Denver, Colorado, has acquired Israeli start-up Cymmetria for an undisclosed sum. A range of products developed by the Israeli company, which has offices in Tel Aviv, utilize deception technology to defeat cyberattacks and protect defenders.
Baxter International, a New York-based medical device company, has entered into a definitive agreement to purchase Cheetah Medical of Tel Aviv and Boston. Purchase price was reported at $190M, with an additional $40M, if certain milestones are reached. Cheetah is a developer of non-invasive fluid management monitoring systems for use in critical care, operating rooms and emergency rooms; the company says that its systems are operational in 400 U.S. hospitals in 30 countries around the world.
FIMI, the Israel-based private equity firm, is engaged in preliminary negotiations for the sale of Israeli micro-irrigation specialist Rivulis, according to Calcalist. According to the newspaper, negotiating partners include foreign funds, some of which were unsuccessful bidders for Netafim, another Israeli drip-irrigation specialist, which was sold to Mexican purchasers last year at a company valuation of about $1.8B. According to the report, FIMI is seeking a company valuation of $500-$550M for Rivulis. Rivulis is the product of a merger between Plastro, founded on an Israeli kibbutz in 1966, and three other companies – T–Systems, Roberts Irrigation and Eurodrip.
Fortissimo Capital Management, the Israeli private equity fund, reportedly has won a tender to acquire Sugat Industries, an Israel packager and marketer of dry food items. According to Calcalist, Fortissimo will pay the $65M purchase price through Melah Haaretz, the Israeli salt firm it purchased recently from Israeli heiress Shari Arison and plans to merge Sugat and Melah Haaretz into a single company.
Facebook, the social networking giant, made its sixth Israeli acquisition in mid-September – Servicefriend, an Israeli start-up developer of artificial intelligence chat and messaging technology. Financial details were not disclosed. Servicefriend’s hybrid technology enables humans to step in and take over when the bots don’t know how to handle a situation, and clients never find out if the messages were generated completely, partly or not at all by humans. The new acquisition will be integrated into Calibra, Facebook’s Tel Aviv-based research unit.
Sky, an Israeli private equity fund, has acquired cloud environment planning specialist Aztek for an undisclosed sum. Based in Modi’in, a city about halfway between Tel Aviv and Jerusalem, Aztek offers cloud environment planning and implementation and software license agreement management for enterprise customers.
Innovid, an Israeli video advertising specialist based in New York, is acquiring Herolens Group of Buenos Aires. Purchase price was not announced.
Two Israeli medical cannabis companies, Cannabit and Tikun Olam, have agreed to merge. If the agreement goes through, Cannbit will pay Tikun Olam $42M and pay an additional $18M if the merged company’s market cap reaches $1B within five years. The original asking price for Tikun Olam was $100M; the company, which sells medical cannabis products, has distribution agreements in several European countries.
Cyrolife Gets EndoSpan Option
Cyrolife, a U.S. cardiac and vascular surgery specialist based in Kennesaw, Georgia, has signed a distribution agreement, credit facilities and option agreement to acquire Israel-based stent graft company EndoSpan Ltd., the two announced in mid-September. Based in Herzliya north of Tel Aviv, EndoSpan develops stent graft systems for treating aneurysms and dissections throughout the aorta. Its Horizon system for endovascular treatment of abdominal aortic aneurysms is currently in preparations for starting an approval process in Europe.
Science & High Technology
307,000 Tech Workers
Around 307,000 Israelis are employed in the technology sector, according to figures published by the Central Bureau of Statistic. The CBS says that the number of tech employees increased by 19,000 in 2018, and by 11,000 in the first five months of 2019; the average monthly wage in technology industry is NIS 24K.
Israeli businesses and the government spent a total of NIS 66.5B (about $18.9B) on research and development in 2017, according to a Central Bureau of Statistics report. The government spent only NIS 5.2B ($1.48B), amounting to 7.8% of the total.
Dental Filling Gets OK
The U.S. Food and Drug Administration (FDA) has given approval for marketing to microbe-resistant dental fillings developed by Nobio, a specialist in materials designed to kill germs on contact. Based in Petah Tikva east of Tel Aviv, Nobio says that the material it has developed can eventually be used in all kinds of medical equipment, water coolers, contact lenses and in industrial applications.
Cardiac Device Approved
The U.S. Food and Drugs Administration (FDA) has granted clearance to a watch and patch developed by Biobeat of Petah Tikva, just outside Tel Aviv. The device, which measures blood pressure, oxygenation and heart rate in hospitals, clinics, long-term care and at home, is designed to provide remote monitoring solutions for patients using cloud-based connectivity or through a cellphone.
Israeli software solutions provider Nice Systems will supply the U.S. Federal Aviation Administration (FAA) with air control technology allowing faster response to incidents and heightened data accessibility. The 10-year contract has an estimated value of up to $137M for Nice, based in Ra’anana northeast of Tel Aviv.
German Tech Search
Germany is taking an increasing interest in Israeli tech companies, according to a report in Globes. Reporting on a visit of a recent “discovery tour” of German industrialists, the paper noted that an increasing number of major German companies, plus German cities and states, have opened Israeli offices to investigate investment in start-ups, acquisitions of companies, conferences and tours, and inviting start-ups to accelerators in Germany.
Oryx Vision Closes
Oryx Vision, a developer of solid-state laser-based Lidar depth vision solutions for autonomous vehicles, has closed down. According to a report in Globes, the company, which had headquarters in Kiryat Ono just outside Tel Aviv, it was due to changes in the autonomous vehicle market which meant that it could no longer offer shareholders a return on investment. Ram Wellingstein, a serial investor who founded the company in 2009, said that Oryx would distribute its $40M in cash to investors.
TriEye, a developer of vision capabilities for conventional vehicles and driverless vehicles, reported a $1.5M investment from Porsche, the German automaker. Headquartered in Tel Aviv, TriEye’s technology is based on nano-photonics research by its CTO, Prof. Uriel Levy, at the Hebrew University of Jerusalem.
School Bus System
Via Transportation, a ride-sharing firm with headquarters in New York, has won a New York City Department of Education contract to manage the city’s school bus system. Developers call Via for Schools the world’s first integrated, automated school bus routing, tracking, and communication platform. Parents and students will be able to track a location of a bus and receive frequent information on service changes. Value of the contract to Via, which was founded in 2012 by Israelis Daniel Ramot and Oren Shoval, is estimated at $36M over a five-year period.
Weighing on the Move
Israel’s Transport Ministry is working on a pilot project to weigh trucks as they travel on the road, according to a report in Yediot Aharonot. The project is due to be implemented on Highway 6, the country’s 170-km north-south toll road. Installation of the system, which will cost slightly more than $500K, is expected next year; ministry officials anticipate that it will bring about a major reduction in the number of overweight trucks, a major cause of accidents on the country’s highways.
International automakers Toyota and BMW and Israeli crowdfunding specialist Our Crowd are among the participants in an investment round of Cartica AI, a Tel Aviv-based developer of an autonomous unsupervised artificial intelligence platform for motor vehicles. Cartica is a subsidiary of Cortica, a developer of unsupervised machine-learning technologies for use in moving vehicles, which last year was engaged in negotiations about possible collaboration with Tesla‘s Elon Musk.
Print Me A Steak
Redefine Meat, a developer of technology for 3D printing of alternative meat products, has raised $6M from a group of investors including CPT Capital, Israel’s Hanaco Ventures and PHW, a German company specializing in poultry. Based in Nes Tziona southeast of Tel Aviv, Redefine Meat started out as part of an accelerator project sponsored by the EU.
Selling a Start-Up
Selling a start-up is easier than forming a government coalition – all it takes is the right person and the right team, said Guy Rinat, at a mid-September conference sponsored by Globes and EY Israel. Guy Rinat sold Demisto to Palo Alto Networks for $560M.
Big Photonics Investment
Israel is investing NIS 200M in a new photonics research center established in mid-September inside the Soreq Nuclear Research Center near Yavne, south of Tel Aviv. Photonics is about the creation, strengthening, transmission and processing of photons – light particles, and it is considered one of the buzz fields in technology, with an average annual growth rate of 7%.
Involved in the New Institute’s Establishment
The Defense Ministry Administration for the Development of Weapons and Technological Infrastructure (MAFAT), Ben Gurion University of the Negev, the Finance Ministry, the Israel Innovation Authority, the Council for Higher Education’s Planning and Budget Committee, and the Forum of Chief Scientists.
Aerospace & Defense
Aid ‘Hurts Israeli Contractors’
Increased U.S. military aid has a negative impact on small and medium-sized Israeli defense contractors, according to Giora Eiland, a retired major general and top defense consultant. Eiland made the statement in a report commissioned by a group of companies likely to be affected by the gradual reduction of Israel’s ability to convert aid dollars to shekels in the 10-year agreement reached in 2016. As a result of the change, Israel will have to spend more of U.S. aid, which totals $3.8B a year, in the U.S. Large companies like Israel Aerospace Industries and Elbit Systems may be able to offset some of the effect of the change by channeling contracts through U.S. subsidiaries, an option that is not usually available to smaller defense firms.
Israeli purchases by Lockheed Martin, developer and manufacturer of the American F-35 stealth fighter, totaled over $500M in 2018, Defense Ministry figures show. According to a report in Globes, Lockheed Martin procurement from industrial companies in Israel has reached an aggregate total of $1.75B in the nine years since Israel first signed a contract to purchase F-35s.
AMOS 7 Launched
Spacecom Satellite Communications‘ Amos 17 communications satellite was launched in early August, lifting off from Cape Canaveral, Florida, on a Falcon 9 rocket of Elon Musk’s SpaceX. The launch came nearly three years after Amos 6 was destroyed in an explosion of a Falcon rocket on the launch pad in Florida. Loss of Amos 6 was costly to the Israeli company: a $285M sale agreement to China’s Xinwei Group was voided and a deal with Facebook to provide Internet coverage for Africa was annulled.
Spacecom now has three communications satellites in orbit – Amos 3 and Amos 4, and the just-launched Amos 17, which already has contracts to provide communication services to Africa.
Iron Fist Chosen
Elbit Systems‘ Iron Fist has won a tender to supply active defense systems for Israel’s new Eitan fighting vehicle and for D-9 bulldozers. The system, developed by IMI which has now been absorbed into Elbit, was chosen over the Trophy/Windbreaker system developed by Rafael. (Trophy has been fitted on Israel Defense Forces Merkava tanks and Namer fighting vehicles; the Defense Ministry said that requirements for the lighter Eitan were different.) The contract has an estimated value of $250M over the next 10 years.
Three Israeli contractors in early August displayed technology they have developed for IDF armored fighting vehicles (AFVs) of the future. The Defense Ministry’s Weapons Development Authority is due to choose one of the trio, private Elbit Systems and government-owned IAI and Rafael, to supply the Carmel, a compact and highly maneuverable vehicle for two soldiers with lethal artificial intelligence and stealth capabilities.
According to Globes, technologies developed for the Carmel are already being integrated into the IDF’s fleet of armored vehicles, including Merkava tanks and Namer and Eitan AFVs. For example, the helmet offered by Elbit will be installed on the new versions of the Merkava Mark 4 tank.
Aeronautics Deal Approved
In mid-August, the social-economic cabinet finally approved the sale of UAV developer Aeronautics to government-owned Rafael and Israeli businessman Avihai Stolero for NIS 850M. The deal, consummation of which had been held up pending Government Companies Authority approval, divides Aeronautics equity between the buyers.
Rafael Opens India Plant
Government-owned defense contractor Rafael and India’s Astra Microwave Pvt inaugurated their joint manufacturing facility in Hyderabad in late August. The 1,850 sq. m plant will develop and manufacture broadband communication systems for the Indian armed forces.
Rafael has acquired a 50% stake in Kanfit. Purchase price was estimated at tens of millions of shekels, according to a report in Yediot Aharonot. Based in Migdal Ha’emek in northern Israel, Kanfit is a global supplier of components for unmanned aerial vehicles, including ready-to-fly assemblies across the entire production chain.
Asian Tank Deal
Private defense contractor Elbit has been awarded an $80M contract for the upgrade of tanks and supply of radio systems to an unnamed country in Southeast Asia. Elbit will supply fire-control and electric gun and turret drive systems for tanks and advanced radio systems from the E-LynX family in several configurations, including hand-held and man-packed radios for infantry.
Elbit Helmet Deal
Elbit says its U.S. subsidiary Elbit Systems of America has been awarded a U.S. Navy contract for the supply of components of the Color Helmet Mounted Display System of the CV-22 aircraft. Value of the contract was not disclosed.
Elbit will supply a number of products, including cockpit displays and engine fuel indicators, for Boeing‘s T-X advanced pilot training system, the Israeli defense contractor announced in mid-September. T-X was selected by the United States Air Force in 2018 to replace its old training system. First stage of the deal has an estimated value of $500M. Parts will be manufactured by Elbit’s U.S. subsidiary, and at an Elbit facility in Karmiel, in northern Israel.
According to a report in Yediot Aharonot, Boeing’s T-X, with Israeli systems integrated in it, is expected to be bought by the U.S. Navy and Marine Corps within the next few years.
DM Innovation Center
The Israeli Defense Ministry and its Weapons Development Authority reportedly are planning to assist innovative technology development by outside entrepreneurs in INNOFENSE, a new innovation center. According to a report in Globes, the center will provide support amounting to hundreds of thousands of shekels to individual projects under its wing. Ten projects are due to be chosen in a pilot project for the new center.
Rafael has agreed to pay the Treasury a NIS 425M dividend from accumulated profits. The payment is the result of an agreement between government-owned Rafael and the Government Companies Authority, which has been ratified by Rafael’s board. Rafael executives have argued that the company’s NIS2.5B in accumulated profits should be used for development and for R&D for future Rafael projects.
Israel Aerospace Industries (IAI), another government-owned defense contractor, is paying a dividend of NIS 104M to the state. The decision on the payment, the largest by IAI in a decade, came shortly after IAI reported second quarter profit of $36M on sales of $985M.
IAI’s Ground Warfare Center
Government-owned IAI is on the way to establishing a new center for ground warfare technologies. The center will be located in Beersheba, where IAI will shift emphasis at its existing facility currently manufacturing combat ships and patrol vehicles into manufacturing autonomous robotic systems, terrestrial radar systems such as Drone Guard, and other advanced ground warfare technologies.
Carmel on the Road
IAI and its Elta subsidiary have completed a successful demonstration of their autonomous Carmel Ground Combat Vehicle (GCV) to the Israel Defense Forces and visiting military dignitaries at an early-September event in northern Israel. Carmel, initiated by the Defense Ministry’s Directorate of Defense Research and Development focuses on enhanced AI, autonomous and automatic capabilities for current and future combat scenarios, the ability to maneuver in urban environments, and operation by a minimum crew of two soldiers.
IAI’s Peretz Dies
Dr. Danny Peretz, the deputy CEO for R&D and business development at IAI, died in late July after a long illness. Peretz was a key figure in many important IAI projects, including development of the Arrow missile defense system.
The Portuguese Ministry of Defense has chosen Israel’s Elbit to supply a complete electronic warfare suite for the Portuguese Air Force new KC-390 aircraft. Value of the contract was not disclosed.
Spike ER2 Sale
Rafael has confirmed the first sale of its Spike ER2 missile, according to a report on the Shephard Media website. Name of the customer was not disclosed, but Shephard reported that it was a “helicopter operator.” In the past, Rafael has said that the Spanish Army had expressed interest in Spike ER2 for its Tiger helicopters; Shephard said Poland was also discussing a deal with Rafael.
Meanwhile, Rafael has been awarded a $13.3M contract to provide TopLite electro-optical sights for the U.S. Navy. The TopLite series has been utilized for a number of applications, including intelligence collection, surveillance, reconnaissance and weapons direction.
U.S. Spike Demo
The U.S. Army was due to hold a demonstration to determine whether Spike Non-Line-of-Sight (NLOS) missiles can be fired from Boeing-made Apache helicopters. According to Jane‘s, the Spike test made by Rafael, was due to take place at the Army’s Yuma Proving Grounds in Arizona.
Spice 2000 Kits Delivered
Rafael has begun delivery of Spice-2000 guidance kits to the Indian Air Force. Deliveries of the total $42M order of the kits are due to be completed by the end of the year, according to a report on the Israel Defense website. The weapons have been delivered to the Gwalior airbase, home base for India’s Mirage 2000 fighter jets.
Spice-2000 converts 2,000-pound bombs into precision stand-off munitions. The Indian Air Force will use the kit on MK-84 bombs.
The Clermont Group of Singapore has completed the acquisition of a 70% equity stake in Eviation, an Israeli developer of electric-powered aircraft. According to Globes, the investment is based on an estimated company valuation of $108M.
Eviation, based in a small community just north of Kfar Saba in central Israel, seeks to become the first-to-market manufacturer of an all-electric propulsion aircraft. Called Alice, the aircraft is designed for commutes of up to 650 miles.
Controp Sale Eyed
Rafael and Israeli businessman Avichai Stolero, who recently completed the purchase of Yavne-based UAV developer Aeronautics, are now seeking to sell 50% of Controp, their new acquisition’s subsidiary, to U.S. investment firm KKR. Rafael and Stolero paid NIS 850M (about $240M) for Aeronautics; according to a report in Globes; their asking price for Controp, which makes sophisticated precision control and observation systems for real-time day-and-night photography from UAVs and light aircraft, is $110M.
Ultrasat to Launch by 2023
The Weizmann Institute of Science and the Israel Space Agency are working together on a new micro-satellite to study cosmic explosions and black holes using ultraviolet light to observe processes that are normally invisible. The 160-kg Ultrasat will carry a telescope “designed to observe the Universe as it has not been seen before,” according to a Weizmann Institute statement.
Elbit and Kazakh Aviation Industry have signed a long-term contract for the manufacture and maintenance of unmanned aerial vehicles in Kazakhstan. In the first stage, the Kazakh plant will manufacture Elbit’s Skylark UAVs.
AI-Capable Tank Sights
Israel is developing new sights that will provide IDF Armored Corps tanks with AI-based analytics capabilities. According to a report on the Israel Defense website, the goal is providing intelligent imaging for a variety of spectral ranges, in systems that are also capable of creating an accurate map reference of the target.
New Marine Sonar
Haifa University researchers partnering with NATO and scientists in Spain and Canada have developed an innovative sonar system to detect hostile divers and submerged mines and distinguish between humans and maritime animals. Funding came from NATO’s Science for Peace and Security (SPS) initiative, which supports mutually beneficial cooperation to meet emerging security challenges by NATO member states and partners.
IWI’s New Assault Rifle
Israel Weapons Industries (IWI) has introduced a multi-caliber assault rifle based on the AR15 platform. \Called Arad, the light-weight, modular assault rifle is offered in two variants: 5.56X45mm and .300 AAC Blackout. IWI says Arad was designed to address the needs of specialist units and infantry forces. Fully ambidextrous, the rifle employs a short-stroke gas piston firing mechanism with a regulator in two positions, which guarantees smooth operation under all environmental conditions.
Elta, a subsidiary of IAI, has unveiled what it calls a breakthrough version of its Over-the-Horizon (OTH) radar (ELM-2270) for maritime surveillance. New algorithms have substantially upgraded the detection and tracking of vessels in the EEZ (Exclusive Economic Zone) range of 200 nautical miles and beyond.
British Training Deal
Elbit Systems UK, a British subsidiary of the Israeli defense contractor, has been awarded a $38M contract to supply comprehensive artillery joint fire system training systems to the British Army. The two-year contract covers both stationary and mobile systems.
Wearable Infantry Tech
Elbit introduced a suite of wearable technologies for infantry at the DSEI defense show in London in early September. The set includes four devices that integrate seamlessly with radio systems and with Battle Management Systems: SmartEye, a head-mounted ballistic eyewareC2 display; Smart WristView, a wrist-strapped C2 display; SmartSight, a C2 add-on to weapon sights; and SmartNVG, a C2 add-on to Night Vision Goggles (NVG).
Elbit has completed the acquisition of Harris Night Vision through the Israeli defense contractor’s U.S. subsidiary. The acquisition, for $350M, was announced six months ago.
In mid-September, Harris was awarded a U.S. Marine Corps Systems Command contract to provide around 14,000 squad binocular night vision goggle (SBNVG) systems aimed at improving situational awareness in reduced visibility. The contract is valued at about $250M.
IAI recently conducted a secret demonstration of quantum capacities the government-owned defense contractor has developed over the years. According to a report in Globes, IAI isn’t the only contractor seeking to utilize quantum capabilities in the development of new, more precise weapons systems. The Israel Innovation Authority recently launched a new consortium dedicated to the developing of infrastructure as a base for quantum technologies. Partners in the consortium include the Weizmann Institute of Science, the Haifa Technion, Ariel University, Ben-Gurion University of the Negev, Bar Ilan University, the Hebrew University of Jerusalem, Rafael and AccuBeat, a Rafael subsidiary specializing in atomic clocks.
The first of 36 Gripen E fighters ordered by Brazil made its maiden flight in Sweden in late August. Saab, the aircraft’s manufacturer, is due to deliver the first plane in late 2020 or early 2021. Brazil will become the sixth country to use the Swedish aircraft, which will have cockpit systems made by AEL Sistemas, a Brazilian subsidiary of Israel’s Elbit.
Yuneec’s Israel Moves
Yuneec International, a Chinese aircraft manufacturer specializing in multi-rotor drones, recently linked with Mobilicom (based in Shoham, in central Israel) for integration of the Israeli company’s SDR/LTE communications systems in some of its models. According to Defense News, Yuneec maintains contacts with several Israeli defense firms and with the Defense Ministry through an Israeli representative, ORZ Marketing.
Japan Defense Agreement
Israel and Japan have signed a Memorandum of Understanding which will “strengthen defense relations” between the two countries, the Israeli Defense Ministry announced in mid-September. The agreement was signed in the Japanese Ministry of Defense headquarters in Tokyo. Details of the agreement were not published.
QinetiQ of Britain has unveiled Banshee NG, a next generation variant of its Banshee family of target drones at the DSEI 2019 trade show in London. According to a report in Israel Defense, the Banshee NG was developed to enable NATO and other Western countries to conduct maneuvers to deal with the growing threat posed by high-speed drones. Equipped with a twin gas-turbine engine, the Banshee NG reportedly can fly at very low altitudes, and up to 12,000 feet, reaching speeds of up to 900 kph.
Dutch Choose Iron Fist
The Royal Netherlands Army has chosen Iron Fist, the active defense system developed by Elbit, for its fleet of 150 CV9 infantry fighting vehicles. The contract, with a potential value of $200M, is through BAE Systems, the European defense contractor.
Meanwhile, the two finalists in the bidders for Australia’s 400Land APC contract have recommended the Elbit active defense system in their specifications. The two are Germany’s Rheinmetall, with its 41 Lynx KF, and South Korean company Hanwha‘s AS21 Redback IFV.
Israel Inside Oshkosh Vehicle
Hero-120 tactical systems developed by UVision are a key component in the new Joint Light Tactical Vehicle introduced by Oshkosh Defense at a recent defense show. UVision is based at the Sapir Industrial Park in Tzur Yigal, a small community northeast of Tel Aviv. According to press reports, UVision’s Hero systems enable high-speed transit flight enabling up to an hour of loitering and hitting moving targets, structures and personnel at ranges of up to 40 km.
IAI’s Azeri Branch
IAI has declined to comment on foreign press reports that the government-owned defense contractor has opened a branch in Azerbaijan. According to Israel Defense website, IAI may plan to utilize the branch to service possible clients in Central Asia. Israel Defense also noted that Azerbaijan has purchased a variety of Israeli arms in recent years, including surface-to-surface missiles, UAVs and suicide drones which it says were deployed in the Nagorno Karabakh conflict with Armenia.
New Golani Commander
Col. Barak Hiram, who lost an eye in the 2006 Second Lebanon War, is the new commander of the IDF’s elite Golani Brigade. A platoon commander in the elite Egoz unit, Hiram suffered a head wound which ultimately led to the loss of one eye. He previously was commander of the Tze’elim training base in southern Israel.
Spokesman Takes Over
Brig.-Gen. Hidai Zilberman has assumed his post as IDF Spokesman. Zilberman, who was appointed in June by Chief of Staff Aviv Kochavi, takes over from Ronen Manelis, who had held the post since 2017.
Ukraine Eyes Elbit Upgrade
Ukraine and Elbit reportedly are discussing a possible upgrade of 11 of the Ukrainian Air Force’s Soviet-era MIG-29 fighters, according to reports in various defense-oriented media. According to one report, the extensive modernization could cost about $40M per fighter.