News Analysis – August 2019

General News Summary

New Vote, Different Outcome?

Considerable changes in the political landscape have taken place in advance of elections scheduled for September 17, the second vote in less than half a year. The repeat-vote was called after Prime Minister Benjamin Netanyahu failed to form a coalition after the previous election on April 9.

Israeli political parties have undergone a major reshuffle since then. But do the alignments and realignments on both the left and right of the political spectrum augur the imminent ouster of Netanyahu, who in July passed the 13 years and 128 days of David Ben-Gurion to become Israel’s longest-serving prime minister?

Political polls taken six weeks before Election Day indicate that it will be difficult, if not impossible for Netanyahu to assemble a viable coalition in the 120-member Knesset. Netanyahu’s center-right Likud and the centrist Blue and White led by former IDF chief of staff Benny Gantz would remain the largest parties, each collecting about 25% of the seats in the 120-member Knesset. Right now, it would appear that Avigdor Lieberman, the former defense and foreign minister – and one-time Netanyahu ally, who left the government last November in protest against what he called Netanyahu’s “surrender to terror” in a cease-fire with Hamas, holds the key to the shape of the next government.

Lieberman, whose right-leaning party long considered “a natural partner” for Likud won five seats, refused to join the coalition Netanyahu attempted to form after the April elections. In the run-up to September’s vote, he said he’d use his swing vote on the assumption that it again held the balance to bring about a secular unity government. Such a secular across-the-political-divide government would encompass both the largest parties, Likud and Benny Gantz’s Blue and White, exclude the religious and ultra-Orthodox and give his party and himself choice portfolios, including Defense, Interior and Health. If Netanyahu and Gantz couldn’t reach agreement, Lieberman was quoted as saying he’d ask Likud to select a different leader.

If current polls reflect what’s going to happen when the votes are counted, neither the Likud-led right or the center-left behind Gantz can muster enough seats to form a government without Lieberman’s Yisrael Beitenu. Lieberman’s party has doubled in size from an actual five seats won in April to an estimated 10 or more this coming September and provides him leverage as a kingmaker, if not a possible prime minister in his own right. But with the kind of government he is demanding, it isn’t unlikely there’d be a change in its security policies or its attitude towards Palestinians in Gaza and the West Bank.

Party Reshuffle

Over the span of five months, the lineup of Israeli political parties has undergone some major changes, although the size of the two blocs, nationalist-right and liberal-centrist left, has remained relatively stable. On the right, two groups that ran separately last time have re-consolidated into the United Right, a matched alliance of religious and secular nationalists headed by a woman, Ayelet Shaked, the 43-year-old former Justice Minister in the previous Netanyahu government.

More activity has taken place on the other side of the political divide, perhaps most notably, the return to active politics of Ehud Barak, who’s moved in and out of politics since serving as Labor Party prime minister in 1999-2001, including rounds as defense minister in the governments led by Ehud Olmert and Netanyahu. Barak, who’s now an outspoken critic of Netanyahu, formed the Israeli Democratic Party in June, and merged it with left-wing Meretz and Stav Shafir, a former Labor front-bencher, into another party, the Democratic Camp, less than a month later.

In another merger, Amir Peretz, elected to head Labor after that veteran party’s debacle in the April elections, teamed up with Orly Levy-Abekasis and her Gesher party. Levy-Abekasis, the daughter of former Likud foreign minister David Levy, served two terms in the Knesset before leaving Avigdor Lieberman’s Yisrael Beitenu party to form Gesher in 2017.

Four Israeli Arab parties that ran in the April elections as two separate lists have consolidated too, into the Joint Arab List. Running separately, the two lists won 10 Knesset seats; current polls have the Joint List winning 13.

Test Success, New Challenges

Israel’s Defense Ministry and the U.S. Missile Defense Agency successfully completed a series of tests of the Arrow-3 Interceptor missile system, which is designed to intercept ballistic missiles outside the earth’s atmosphere in late July. The Israel Air Force and Israel Aerospace Industries, which manufactures the Arrow-3, also participated in the tests, conducted at the Pacific Spaceport Complex-Alaska in Kodiak, Alaska.

The demonstrated capability to intercept and destroy hostile missiles outside the atmosphere, officials noted, represents a major upgrade in Israel defense capabilities, including against weapons with nuclear warheads. Prime Minister Benjamin Netanyahu, noting that the test exceeded all expectations, said that Israel now “has the ability to act against ballistic missiles launched against us from Iran or anywhere else.”

“We’re several steps ahead of Iran, and are operating against future threats from them,” said a senior Defense Ministry, noting that the Alaska trial marked the final stage in a series of successful tests held over the past year.

The test, which had been planned far in advance, nevertheless came against the background of heightened tensions in the Persian Gulf, including Iranian commandeering of two oil tankers it claimed had violated its territorial waters at the Strait of Hormuz, imposition of new U.S. sanctions as Teheran resumed production of pre-nuclear material in the wake of the U.S. withdrawal from the 2015 nuclear limitation agreement and reinforcement of U.S. forces in the Gulf. Iran expressed its defiance of mounting foreign pressure, refusing to back down in the tanker dispute and violating U.N. Security Council resolutions by test-firing a medium-range Shehab 3 missile.

Israel remains concerned about continued Iranian efforts to provide Hizballah, its Shi’ite Lebanese surrogate, with advanced arms. For some time, Israel has made periodic air strikes against Iranian facilities in Lebanon and Syria; Israeli officials say Teheran has been deploying missile systems in Iraq, which is harder for Israel to attack than Syria. According to Arabic press reports, Israel’s new F-35 warplanes were involved in late July airstrikes against pro-Iranian militias’ missile installations and weapons depots in northeastern Iraq.

Israel’s concerted effort to prevent, or at least abate, the flow of Iranian arms to its neighbors is best understood in the context of its own missile defense systems, which despite its remarkable success in protecting Israeli citizenry does not offer complete protection. In May, gunners in the Gaza Strip attempted to break down the Iron Dome system by simultaneously firing large clusters of rockets at Israeli targets; the Israeli missile defenses successfully fended off that attack, but it’s not clear if it will be able to provide the same level of protection against Lebanese Hizballah’s much larger arsenal of rockets in the north.

The Iranian ambition, according to Israeli intelligence sources, is to flood Syria with an array of missile factories and launch sites for missiles and drones, arsenals of advanced arms and terror operations. In this context, Jerusalem is deeply concerned about the impending opening of the new Albukamal border crossing between Iraq and Syria, a key part of the effort to establish a “land bridge” that will facilitate movement of materiel and forces from Iran to the Syrian front as a “safer” alternative to risky air and naval routes. Pro-Iranian Hizballah and Shi’ite forces have been in control of the Albukamal sector, on both sides of the border, for almost a year, according to a report by Israel’s Meir Amit Intelligence and Terrorism Information Center.

Anti-Trafficking Leader

A U.S. State Department report has once again placed Israel among the world leaders in the battle against human trafficking. Israel has been in the U.S. top category of anti-traffickers since 2012.

 

The Economy

Deficit Soars

Israel’s government deficit reached NIS 54B in the first half of 2019, amounting to 3.9% of Gross Domestic Product. The deficit six months earlier, at the end of December 2018, was 2.9% of GDP. The change was attributed both to seasonal decline in revenue from taxes on the one hand, and increased government expenditures, some of them connected to the elections in April.

Forex Record

Israel’s foreign exchange reserves stood at a record $120.108B at the end of June, up almost $2B from the end of May, according to a Bank of Israel report. The reserves represent 3.25% of GDP.

Rate Unchanged

The Bank of Israel Monetary Committee left basic interest rates unchanged in July, leaving it at 0.25%, despite indications of planned rate cuts by the U.S. Federal Reserve. Israel’s rate was raised to the current 0.25% last November.

Drop in CPI

Israel’s CPI declined by 0.6% in June, much larger than anticipated. The decline meant that Israel’s inflation from July 2018 to June 2019 amounted to only 0.8%, substantially lower than the Bank of Israel’s annual target range of 1-3%.

Estimate Revised

Israel’s Central Bureau of Statistics published a third estimate for economic growth for the first quarter of 2019. The new estimate, published in mid-July, is 5%, up from the 4.8% second estimate but below the 5.2% first estimate. The growth rate was the highest quarterly growth rate since the third quarter of 2017.

Four Million Tourists

More than four million tourists visited Israel in 2018, spending an estimated $5.8B, excluding international transportation costs, according to a Tourism Ministry survey. 77% of all tourists visited Jerusalem, followed by 67% for Tel Aviv and 48% for the Dead Sea. About 32% of all tourists visited Tiberias and Lake Kinneret, the survey disclosed.

OECD Rating

Israel has registered a dramatic improvement in its place in the export ratings of the OECD, representing the world’s largest economies. According to a report in Israel Today, Israel ranked last among the 36 OECD members in 2015 and rose to 8th in the rankings for 2018 published in July.

U.N. Purchasing

Israel has never been the U.N.’ favorite country, but according to data provided by Israel’s Permanent Mission to the international organization, it is increasingly choosing to purchase Israeli goods and services. Over the past four years, acquisitions of Israeli goods and services have increased each of the past four years, reaching a total of $256M for the 4-year period. Last year’s U.N. acquisitions amounted to $66M.

Japanese Presence

In the first half of 2019, Japanese investors backed 34 Israeli companies, up from 28 companies during the entire year 2018, according to a report in Yediot Aharonot’s Calcalist economic supplement. Elhanan Harel, president of an investment firm promoting business between Japan and Israel, told Calcalist: “There are currently 87 offices in Israel that represent almost all of the leading Japanese corporations, with the exception of Tokyo-listed Sumitomo Corp., which is also planning to inaugurate offices in Israel.”

Trade between Israel and Japan, not including diamonds, amounted to $3.5B in 2018, up about 20% from 2017. Japan is the 11th largest importer of Israeli goods in terms of annual turnover, and the third largest Asian importer.

Objection to Airport Closing

Residents of northern Tel Aviv neighborhoods have joined the ranks of those objecting to closing Sde Dov Airport near their homes and plans to build a massive housing project on the site. The airport was shut down in late June, despite an extended high-profile campaign to keep it open. Israel Land Authority plans for the site include 16,000 housing units, thousands of hotel rooms and commercial and office developments. The airport was the departure point for many domestic flights, particularly to Eilat, where tourism sources say shifting of departures to Ben-Gurion International Airport, some distance away, has reduced the number of Israelis flying to the resort city.

Joint Gas Plant?

Egypt and Israel are considering entering into a partnership to build and operate a $15B natural gas liquefying plant in Egyptian Sinai on the Red Sea coastline. According to a report in Globes, gas exports from the plant would be directed at Asian markets. In the past, the two countries considered building a similar plant to be located in Israeli territory near Eilat. a plan which fell through, among other things, due to objections from Israel’s Energy Ministry. According to Globes, such objections are much less likely to be raised if the plant is in Egyptian territory, both because of the jobs it would create for Cairo’s hard-pressed economy and because of lower environmental standards. The idea was discussed during the recent Cairo visit of Yuval Steinitz, Israel’s Minister of National Infrastructure, Energy and Water Resources.

Meanwhile, the Israel Competition Authority has authorized the Delek Group and Noble Energy, operators of Israel’s offshore natural gas fields, to purchase part of the natural gas pipeline between Israel and Egypt from EMG East Mediterranean Gas. The 280-km pipeline built to supply Egyptian gas to Israel Electric Corp. was shut down in 2012 after several explosions attributed to sabotage.

In the Top Ten

Israel has been rated in the Top 10 of the Global Innovation Index. It’s the country’s highest ranking in the survey, published annually by Cornell University, the INSEAD Institute in Switzerland and the U.N.’s World Intellectual Property Organization, after an 11th place finish in 2018 and 17th in 2017.

In individual categories that make up the over-all classification, Israel was first in a number of fields including export of high-tech services, Wikipedia editing, and creating applets; second in cooperation between business and higher education; third in business sophistication, foreign R&D investment and women’s role in highly-trained labor.

 

Aerospace & Defense

Mossad Tunnel Unit Gets Defense Prizes

The Mossad team which “kidnapped” Iran’s nuclear archive and brought it from Teheran to Israel; IDF soldiers who exposed and neutralized tunnels Hizballah dug under the northern border; developers of Rafael Advanced Defense Systems‘ Spice 1000 system that turns bombs dropped from the air into precision weapons; and the developers of a project for the Shin Bet security agency that has prevented numerous terrorist attacks, were awarded Israel’s annual Defense Prize at an early July ceremony at the President’s Residence in Jerusalem.

More Layoffs at IAI?

IAI is formulating economy measures involving the layoff of 600 workers, according to a mid-July report in Globes. The firings would follow previous IAI staff reductions of about 1,000 employees in the past three years. According to the report, continuing efficiency problems and the 2018 loss of almost $50M were key factors in the decision. Earlier this year, management and the IAI workers committee, one of the country’s strongest trade unions, agreed on measures to reform the government-owned company’s civilian division.

IAI Head: Merger Inevitable

A merger of government defense contractors IAI and Rafael is inevitable, says IAI chairman Harel Locker. “There is no logic in two government companies competing with each other in the missiles sector; the situation requires them to merge,” Locker told Globes in June. “IAI and Rafael are business companies and the largest exporters in the economy, with IAI exporting $10B a year, 80% of its output, and Rafael exporting 50% of its output. The global trend is towards mergers and the industry is becoming a field for giants. IAI is a national focus of know-how in radar, outer space, unmanned aerial vehicles, aviation, and missiles. Rafael is also a national focus in missiles.”

Lunar Partnership

IAI and Firefly Aerospace of Cedar Park, Texas will partner as participants in NASA’s Commercial Lunar Payload Services (CLPS) program, the companies announced in mid-July. Government-owned IAI and Firefly, a private firm, will compete against eight other projects to deliver science payloads to the moon’s surface. Financial terms of the deal were not disclosed.

IAI and Firefly plan to build a lunar lander based on IAI’s experience with Beresheet, the private spacecraft built in collaboration with Israeli nonprofit SpaceIL, which crash-landed on the moon in April following two-months in space. Plans for a second Beresheet craft were scrapped in late June.

Satellite Launch

NSLComm, a communications-technology start-up based in Airport City, just outside Ben-Gurion International Airport, sent its first nano-satellite into space in early July. NSLSat-1 was fitted with an innovative, flexible and expandable dish antenna to offer high-throughput communications for small satellites up to 100 times faster than that of today’s best-performing nano-satellites. The Israeli device was one of 33 satellites carried into orbit by a Soyuz rocket fired from the Vostochny Cosmodrome in the Amur Oblast, in Russia’s Far East.

Spy Satellite for Rafael

The Defense Ministry is about to break a precedent of more than two decades and order an intelligence-gathering satellite from Rafael rather from its customary supplier, IAI. Both companies are government-owned.

According to an exclusive report in Calcalist, Rafael, IAI and Imagesat all submitted bids for the new satellite, which will be smaller than the Ofek satellites already in orbit and enhance Israel’s intelligence-gathering capabilities.

South American Sale

Aeronautics, the Israeli developer of unmanned aerial systems and unmanned aerial vehicles, has won a $10M contract to provide its Orbiter 2 and Orbiter 3 UAV systems to an undisclosed South American client. The deal, reported in mid-July, came shortly after Aeronautics closed another Orbiter sale with a client it would only describe as “important.”

Meanwhile, the Government Companies Authority has delayed authorization of the sale of Aeronautics, which is based in Yavne southeast of Tel Aviv, to a partnership of Rafael and businessman Rafael Stolero. The Authority objects to the 50-50 partnership between Rafael, a government company, and a private individual.

Elta-Lockheed Collaboration

Elta Systems, a subsidiary of IAI, and U.S. defense contractor Lockheed Martin have successfully demonstrated an LTAMDS low tier air and missile defense system for the U.S. Army. The two firms displayed and tested their solution during a two-week trial at the White Sands Missile Range in New Mexico, in which several other firms also participated. The radar used was Elta’s ELM 2084 Multi-Mission Radar, which is an integral part of Israel’s Iron Dome and David’s Sling anti-missile systems and the Barak surface-to-air missile. A final selection of one vendor to produce six prototype systems is due by the end of the year.

Elbit Wins Patent Suit

A U.S. Court of Appeals in Washington, D.C. has affirmed a judgment against Hughes Network Systems for infringing an Elbit Systems patent relating to high-speed satellite communications. A federal court in Texas originally ruled in Elbit’s favor, awarding damages amounting to $30M.

Big IAI Contract

IAI will upgrade passenger aircraft to cargo configuration in a $400M deal with an unnamed foreign company, announced in late July. The deal, which includes an option for additional aircraft, is the first major contract for government-owned IAI’s new Aviation Group, formed by the consolidation of three previous divisions.

Treasury Seeks Draft Service Cut

As part of negotiations on a new 5-year IDF budget, the Treasury has renewed its demand for differential periods of compulsory military service. Under the plan, draftees the army wants to release will serve 24 months, compared to 28 months for those it wants to keep. The proposed reduction is one of the cost-saving measures proposed by the Treasury in negotiations over Tnufa, a new military spending blueprint to replace the current 5-year budget when it expires next year.

Joint Exercise Acknowledged

The British military acknowledged for the first time in late June that its fighter jets had participated in a joint exercise with Israeli aircraft. U.S. aircraft also took part in the joint training exercise for F-35 warplanes.

$800M Forecast

Israel’s Bet Shemesh Engines will continue manufacturing jet engine parts for Pratt & Whitney Canada until at least 2039, after signing an extension of its long-term contract with Pratt & Whitney. Revenue from the agreement is expected to reach $800M spread over 2020-2039. The new agreement brings Bet Shemesh group’s frame orders under its agreements to $2.6B.

Iceland Deploys Elbit’s Hermes

Iceland has become the first European country to deploy Elbit Systems Hermes 900 unmanned aircraft system maritime patrol services. Long-range UAVs based at Egilsstaoir Airport in the east of the country can cover more than half of Iceland’s exclusive economic zone.

Late last year, Elbit Systems secured a contract from the European Maritime Safety Agency for maritime UAS patrol services, in cooperation with CEiiA of Portugal.

Elta-Embraer Team Up

Elta Systems, and Brazil’s Embraer Defense & Security have signed a strategic cooperation agreement to produce an airborne early warning (AEW) system. The next-generation aircraft is based on Embraer’s Praetor 600 super midsize business jet, with Elta’s 4th generation Digital Active Electronically Scanned Array (AESA) radar with integrated IFF capabilities. Embraer is providing the air platform, ground support, communications systems and aircraft integration with Elta contributing the AEW radar, SIGINT (Signals Intelligence) and other electronic systems and system integration.

Joint India Bid

Elbit Systems and SGD Engineering, an Israeli specialist in airborne mission solutions and conversions based in Yokne’am near Haifa have joined in bidding on a $150M contract for the upgrade of Dornier 228 aircraft for the Indian Air Force. The upgrade will include an advanced glass cockpit and new avionics. Ruag Aerospace from Switzerland and India’s SA Airworks are also competing in the tender.

India Contract

Rafael has signed a $100M contract with KRAS (Kalyani Rafael Advanced Systems Ltd. India), to manufacture and supply 1,000 Barak 8/ MRSAM missile kits for the Indian Army and Air Force. In compliance with New Delhi’s Made-in-India policy, KRAS is a joint venture of Rafael Advanced Defense Systems Ltd. and Kalyani Strategic Systems. MR-SAM is a land-based configuration of the long-range surface-to-air Barak-8 naval air defense system.

Elbit Lasers for NATO Tankers

J-Music, the laser system designed by Elbit Systems to protect aircraft against infrared missiles will be installed in NATO’s Multinational Multi Role Tanker Transport Fleet (MMF) starting in 2020, Elbit announced in mid-June. In a 3-day series of flight tests for the new system at the end of May, the system was integrated into Airbus-manufactured A330 Multi Role Tanker Transport (MRTT) aircraft. J-Music functioned flawlessly throughout the tests, proving itself capable of dealing with multiple threat types including head-on, tail-on and side-on threats from a number of several ranges at different altitudes.

Elbit also was awarded a $73M Diehl Defense GmbH contract to provide J-Music for the German Air Force A400M aircraft.

Dutch Client

Cyber Intelligence, a subsidiary of Israel defense contractor Elbit Systems, has been selected to provide the Dutch National Police with a cyber intelligence system. The system is designed to provide high-availability and scalability and enable customization with work-flow, legislation and other Dutch National Police specifications.

Estonia Getting Spike

EuroSpike, jointly owned by Israel’s Rafael and German companies Rheinmetall and Diehl Defense, is providing Spike antitank missiles to the Estonian armed forces in a deal valued at Euro 40M. The missiles, developed by Rafael and marketed by the German firms, are due to be delivered in early 2020.

Digital Campus

Beersheba Mayor Rubik Danilovich was among the dignitaries attending the mid-June dedication of the first building in what will be IDF’s new digital campus. The campus, spread over an area of 150,000 sq. m, will be located in the Gav-Yam Negev Advanced Technologies park near Ben-Gurion University. When completed, it will house IDF intelligence and cybersecurity units due to move there from the center of the country.

Elta’s AI

Elta Systems, a subsidiary of government-owned IAI, has developed an advanced algorithm that takes photo analysis to a new level. According to a report on the Mako website, the artificial intelligence system can analyze images taken by satellite or from radar and determine the operation and movement of the adversary. According to an official quoted by the website, the algorithm can determine if and when someone has been in the area, and even the footsteps of a single individual.

Hercules Flights Resumed

Israel Air Force commander Amikam Norkin ordered resumption of training flights of C-130 Hercules aircraft, called Karnaf (Rhino) in Hebrew in early July, after an extended suspension following an accident involving one of the aircrafts in January. The Army Spokesman, in a statement, said that the process included a “program for continuing improvements at maintenance and quality control levels.”

Honduras Gets Israeli Vessels

Israel Shipyards, a former government company, has delivered a new Sa’ar 62-class patrol vessel to the Honduras Navy in a deal valued at $60M. Other international clients of Israel Shipyards, which was privatized in 1995, include Azerbaijan, Cyprus and Argentina.

 

Finance & Investment

New Bank CEOs

Two of Israel’s largest banks, Bank Hapoalim and Israel Discount Bank, chose new CEOs in mid-July. At Hapoalim, Dov Kotler was named to replace Arik Pinto, who is expected to leave his post ahead of time because Kotler was selected over the candidate of his choice. Kotler has served as CEO of the Isracard credit card company, CEO of the Prisma investment house, CEO of Union Bank of Israel and CEO of Cal-ICC Israel Credit Cards.

At about the same time, Israel Discount chose Uri Levin to replace Lilach Asher-Topilsky as CEO. Levin, who currently heads Israel Discount Bank in New York, is considered a protege of Asher-Topilsky.

At the time of the naming, Bank Leumi had not announced a replacement for its CEO, Rakefet Russek-Aminoach, who in mid-June that said she was stepping down.

Energean Buys Italian Firm

Energean, the Greek company which owns Israel’s offshore Tanin and Karish gas fields, has purchased Italy’s Edison Energy and Production for $750M. The purchase is part of Energean’s acquisition of oil and gas fields in Egypt, Italy, Algeria, Croatia and the UK’s North Sea as well as development projects in Egypt, Italy and Norway. In addition to an initial $750M, Energean will pay $100M after the start of gas production in Italy’s Cassiopea field, probably in 2022.

Compass Valuation

Compass, Israeli high-tech magnate Ori Allon’s U.S.-based real estate company, recently completed a $370M financing round. Yediot Aharonot said the new funding brought valuation of Allon’s company to $6.7B. Investors in the recent round included financier Peter Thiel’s Founders Fund.

 

Mergers & Acquisitions

Bridgepoint-Qualitest

Bridgepoint, a pan-European private equity investment firm with headquarters in London, is purchasing a controlling stake in Israel’s Qualitest at a reported company valuation of $420M. Qualitest, based in Petah Tikva just outside Tel Aviv, has developed a range of AI-powered engineering and testing products for firms in the technology, financial services, retail, telecom, healthcare, insurance, aerospace, media and utilities sectors. The seller, Marlin Equity Partners, purchased Qualitest three years ago at a company valuation of $85M.

Google-Elastifile

Google has acquired Elastifile, an Israeli provider of scalable enterprise file storage for the cloud, for an undisclosed sum. Investors in Elastifile, which is based in Herzliya north of Tel Aviv and Santa Clara, California, include Western Digital Capital, CE Ventures, Lightspeed Venture Partners, Battery Ventures, Dell Technologies Capital and Cisco Investments.

AppLovin-SafeDK

AppLovin, the U.S.-based mobile gaming platform developer, has acquired Herzliya-based SafeDK, a creator of software development kits for mobile apps, for an undisclosed sum.

Tadiran Holdings-Pach Taas

Israel’s Tadiran Holdings has acquired 70% of the Pach Taas Group, which includes Pach Taas (Ashkelon) and D&P Clean Rooms, for NIS 100M. The acquired companies, which have an aggregate annual sales turnover of NIS 150M, deal in air conditioning and treatment in the industrial and commercial sectors.

Neng Yang-ADT

China’s Neng Yang investment fund has acquired Advanced Dicing Technologies (ADT), based in Yokne’am near Haifa, for a reported $35M. ADT develops and produces blades and machinery for the dicing of silicon-based integrated circuits, package singulation and hard material microelectronic components.

Ceva-Hillcrest Labs

Herzliya-based Ceva, a fabless semiconductor firm, has announced the acquisition of the business of Hillcrest Laboratories from InterDigital. Financial details were not disclosed. Based in Rockville, Maryland, Hillcrest Labs provides software and components for sensor processing in consumer and IoT devices. Ceva’s smart sensing technology portfolio now includes sound, vision and motion sensing, complemented with specialized processors for implementing AI at the edge.

Trax-Planorama

Trax, the Singapore-Israeli retail store analytics specialist, has acquired Planorama of France for an undisclosed sum. Planorama, a French start-up, is developing artificial intelligence image identification solutions for consumer product manufacturers and retail chains.

Amazon-E8 Storage

Amazon, the Internet e-commerce giant, has purchased E8 Storage of Tel Aviv for an estimated $50-60M. E8 Storage claims it has developed software-based flash storage installations that are 10 times faster than existing hardware solutions on the market, at a lower cost.

ITV Studios-Armoza Formats

ITV Studios, which operates six TV channels in the U.K., has acquired Israeli TV format developer Armoza Formats for an undisclosed sum. Formats developed by Armoza, including singing show The Four, the Still Standing game show and numerous others are aired on channels around the world.

Cold Cash

Froneri has signed a deal in London agreeing to acquire Israel’s Noga Ice Creams, a subsidiary of Osem-Nestlé. Froneri, a partnership between Nestle and R&R of Britain, is Europe’s second largest ice cream manufacturer and the third largest in the world. Financial details were not announced.

Teva Sells Oncotest Stake

Israel’s financially troubled Teva Pharmaceuticals has sold its stake in Oncotest, which has developed genetic testing to aid determination of cancer treatment, to Rhenium for an undisclosed sum. Founded in 1998 by CEO Dr. Lior Soussan-Gutman, Oncotest, considered a pioneer of genetic testing in Israel, it markets laboratory tests in Israel for clients from all over the world in order to map malignant tumors, and adjust treatments and clinical trials specifically to the patient’s tumor. Rhenium, located in Modi’in about halfway between Jerusalem and Tel Aviv, markets laboratory equipment to health-care providers and private laboratories.

 

Science & High Technology

Ahead of Pace

The $4.55B raised by Israeli start-up technology companies in the first seven months of 2019 seems to indicate that total fund-raising for the year will exceed the record $6.4B raised in all of 2018. According to IVC-ZAG statistics, Israeli tech companies raised $5.3B in 2017.

Vision Deal

Devices developed by OrCam Technologies of Jerusalem will be available to members of the American Council of the Blind under the terms of a cooperative agreement announced in early July. OrCam’s device, MyEye2, is designed to help visually impaired people “read.” The finger-sized device, fitted with a camera and a microphone and clipped onto glasses, discreetly reads printed and digital text aloud to the person wearing it.

OrCam was founded in 2010 by Amnon Shashua and Ziv Aviram, founders of vehicle technology company Mobileye, which was sold to Intel in 2017 for $15.3B.

R&D Grants

BIRD – Israel-U.S. Binational Industrial R&D Foundation, will invest $8.2M in nine joint projects of American and Israeli companies. With private equity financing, total investment will total $20M. The projects, in tech fields including agtech, medical devices and digital health, have been vetted by the Israeli government’s Israel Innovation Authority and the U.S. National Institute of Standards and Technology. BIRD grants cover up to 50% of a project’s development costs, up to a limit of $1M per project.

The projects include cooperation between government-owned Israel Aerospace Industries (IAI) and Headwall Photonics of Bolton, Massachusetts, for the development of a “smart farm” precision decision support system using unmanned aerial vehicles for large-scale agricultural projects.

The Wind (and Sun) in Spain

Enlight Renewable Energy, based in Rosh Ha’ayin in the tech belt northeast of Tel Aviv, has signed an agreement with Spanish entrepreneurs to develop solar and wind energy projects in Spain’s Castilla-La Mancha region. Enlight expects the projects to produce 300-600 megawatts of electric power.

Advanced Drip

Israel, whose Nefafim pioneered drip irrigation more than half a century ago, may have produced another system which will make watering field crops even more efficient. N-Drip, headed by former water commissioner Uri Shani, has developed a gravity micro-irrigation system that utilizes existing flood irrigation infrastructure to provide efficient drip irrigation. Instead of relying on external energy, N-Drip’s system utilizes field topography and gravity power to reduce conversion costs and increase operational efficiency aimed at conserving both water and fertilizer while increasing yields.

Cannabis Degree

The Max Stern Yezreel Valley College, located in the Jezreel Valley between the cities of Nazareth and Afula, is launching a new degree program in medical cannabis, focusing on three main disciplines: growth and production of medical cannabis, medicine and pharmacology, and economics and legal issues surrounding medical cannabis. Third-year students will get practical experience working on a cannabis farm and a processing facility.

Cannabis Offer

Israeli medical cannabis firms have suggested a special levy on exporters to fund five extra Health Ministry positions which must be filled before legal export of cannabis products can begin. According to a report in Calcalist, export, which had been approved in January, is due to start in September. Although potential cannabis exporters say they’re ready to export, the Health Ministry still needs to fill five positions in its cannabis unit without which exports cannot begin.

Neural Network Chipmaker

NeuroBlade, a developer of advanced artificial intelligence chips based in Hod Hasharon, northeast of Tel Aviv, has completed a $23M financing round from investors including CheckPoint Software co-founder Marius Nacht and Grove Ventures, whose chairman Dov Moran is best known as developer of the USB disk-on-key memory stick. NeuroBlade founders Elad Sity and Eliad Hillel are both graduates of the IDF Intelligence Corps technology unit.

Oracle Closing Ravello

Oracle, the enterprise software giant based in Redwood City, California, says it is closing down Ravello, an Israeli cloud applications subsidiary it acquired in 2016 for $430M. Industry sources note that the closing of Ravello, whose base is in Ra’anana in the high-tech belt northeast of Tel Aviv, is part of large global layoffs at Oracle, affecting the entire U.S. and international operations of the company.

Super Smart Traffic Light

Intelligent Traffic Control (ITC), based in Azur just outside Tel Aviv, is installing an AI, artificial controlled traffic light at a busy intersection near Ben-Gurion International Airport. The light is an upgrade from the smart traffic lights currently located at dozens of intersections that regulate changes of signals with information from road sensors. The ITC system on the other hand gathers data from a network of cameras installed along the road leading to the intersection to calculate expected traffic flow in a fully automated process. If the test succeeds, ITC plans to begin sales of the advanced light by the end of 2019.

Adidas Scouts Israel Tech

A team of executives from sporting goods giant Adidas visited Israel in mid-July to scout out new technologies. The team, hosted by the Jerusalem Venture Partners VC firm, met Jerusalem entrepreneurs and discussed some of the company’s key initiatives in the realm of sustainability, including plastic alternatives, manufacturing running shoes from 100% recycled materials and reduced water use in dyes.

Radar for All

Magos Systems, based in Rehovot southeast of Tel Aviv, says it has achieved a breakthrough in the application of radar technologies developed for the military to civilian use in general and perimeter security in particular. The company claims that its “virtual fence” systems offer affordable protection to a variety of civilian and public facilities, including air and seaports, oil refineries and power plants, solar farms and water treatment facilities.

Chinese Investment in Heart Filter

Filterlex Medical, based in Yokne’am in northern Israel, has raised $3M in Series A funding from an unnamed Chinese investor. Filterlex has developed a protection device aimed at reducing the risk of stroke during catheter-based heart procedures.

Carmakers Invest

International automakers Toyota and Volvo have participated in a $31M financing round for UVeye (short for Under Vehicle Eye). An Israeli company with headquarters in New York and offices in Tel Aviv, Munich and Tokyo, UVeye has developed solutions for automatic external security and mechanical inspection of vehicles.

UVeye began as a security company whose systems, designed to detect bombs and drug smuggling, were installed at sensitive sites including embassies, military bases and ports. It later adapted its technology to identify faults in vehicles about two years ago.

vCita Investment

vCita, a Herzliya-based developer of a total management application for small businesses, has raised $15M in a financing round led by Forestay Capital. vCita’s co-founder, Itzik Levy, did his army service as an officer in the security division of the IDF Intelligence Corps 8200 technical unit.

Fox Buys Preciate Stake

Fox-Wisel, operator of the Israeli Fox clothing retailing chain, has acquired 20% of Preciate, a facial technology-based customer recognition start-up headquartered in Holon, just south of Tel Aviv. Under terms of the agreement, Fox-Wisel will aid Preciate in developing foreign customers for its technology, which tailors service to each customer it “recognizes.”

Postal Partnership

Swiss Post Ltd. and state-owned Israel Postal Company Ltd. have teamed up in a joint effort to find Israeli start-ups, according to the Government Press Office. The two postal entities fields of interest, all related to postal services, include unmanned stores, robotics, deliveries and digital trust services.

TV Tech Partnership

Zee5, an Indian TV-on-demand website, has partnered with Tel Aviv-based Minute.ly, a video enhancement start-up which utilizes artificial intelligence tools to automatically analyze videos and create video teasers for publishers and broadcasters. Financial details were not disclosed.

Drone Developments

Israel, whose major defense contractors have a world reputation for development of unmanned aerial vehicles, is also earning a place for itself in the civilian market for small UAVs. Some of the leaders in the field, according to a report in Calcalist, include Tevel Aerobotics, whose UAV equipped with a meter-long mechanical claw can pick fruit, thin and prune orchards and determine if fruit is ripe for picking; Flytrex, with a mobile app that can control drone-based delivery services; SprayX, which adapts commercially available drones for unmanned cropdusting; Civdrone, with UAVs for surveying and construction inspection; and Airobotics drones for security and land surveying.

Spotting Danger

Shieldocs, a Tel Aviv-based start-up, says it has developed the capacity to detect potential dangers for companies operating on the cloud. “We have succeeded in solving the problem standing before every organization,” says Guy Eidorfer, the company’s founder. “Understanding what business data it should defend when cooperative operations are taking place on the cloud. Today many cooperative ventures are blocked due to the high level of attention to data protection, damaging the work itself.” Eidorfer says that his company’s Shieldox Autonomous Insights can scan data and determine what needs to be protected and its location, using a proprietary algorithm.

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