News Analysis – February 2015

General News Summary

Election Countdown

With less than a month remaining before Israel’s Knesset elections, a quick guide to the parties involved and the main issues.

The Likud

Prime Minister Benjamin (Bibi) Netanyahu’s popularity may be waning abroad and at home. He and the Likud party he leads may still face a real threat to arrive the No. 2 party in the March 17 voting to elect 120 members of the Knesset, Israel’s unicameral parliament. Like him or not, many Israelis consider his experience a most important qualification to lead the country facing the multiple threats of a nuclear Iran, spreading Islamic fundamentalist militancy, Hizballah in the north and Hamas in Gaza, the erosion of ties with President Obama and with the United States, Israel’s principal ally and protector, and the continuing deadlock off-again-on-again (mostly off) in negotiations with the Palestinian Authority. Bibi’s electoral stock got some boost from tension along the Lebanese and Golan Heights borders, which was triggered by the late January killing of Lebanese Hizballah key men and an Iranian general just inside Syrian territory for which Israel has not claimed responsibility. His weak points: management of the economy and the continued high cost of living, which he failed to deal with during his consecutive 6 years in power and perversely, the national atmosphere of a scandal concerning overspending at the Prime Minister’s residence in Jerusalem and the way his wife, Sara, reportedly treats staff. The prime minister’s problematic relationship with Obama is likely to both hurt Bibi among center and left-leaning voters, but may strengthen his standing with the emotional nationalist right wing.

The Zionist Camp

The alliance between the Labor party led by Isaac (Buji) Herzog and Hatnua of former foreign minister Tzipi Livni poses the most substantial threat to Netanyahu’s hegemony. By running on a joint ticket, Herzog and Livni seem to have demonstrated that in pre-election polls at least, the whole is greater than the sum of its parts. Herzog equals Netanyahu in poll points as voters’ preference for prime minister and their tickets are virtually neck and neck in the race to see which party wins the largest number of seats. The rub is that the leader of the party taking the most seats will not of necessity be asked by President Reuven Rivlin to form the next government; that mandate depends on who can present the largest bloc of Knesset seats, including potential coalition partners. Labor-Hatnua are basing much of their campaign on consumerism, the state of the economy, the problems of average Israelis in buying homes and supporting their families and disaffection with Netanyahu’s performance since he was elected prime minister in 2009. Its weaknesses include lack of a strong defense record by either of the tickets two leaders, with former Army Intelligence chief Amos Yadlin as the only ex-general in party leadership and the misgivings of many Israelis about what are wrongly perceived as its so-called “leftist” positions on the Palestinians.

The Jewish Home

Led by high-tech millionaire Naftali Bennett, the Jewish Home party combines parts of the once-moderation National Religious Party and settler-Jewish Orthodox National Union party. Bennett, who does not hide his aspirations for the highest level of national leadership, is a former close Netanyahu associate who says openly that Israel should unilaterally and immediately annex some parts of the West Bank and generally advocates a more militant line vis-a-vis the Palestinians. He strongly and openly criticized Netanyahu’s management of Operation Protective Edge last summer, suggesting that Israel “finish the job” to wipe out terrorism in Gaza. Bennett’s efforts to broaden his party’s appeal to secular/traditional Israelis, particularly of Middle Eastern origin, ran afoul recently when his attempt to name former football star-coach-media sports commentator Eli Ohana to the Jewish Home ticket was opposed by rabbis with strong influence on his electorate; Ohana, who is of Moroccan Jewish origin and grew up in one of Jerusalem’s poorest neighborhoods, quit the ticket after two days, saying he hadn’t expected such uproar triggered by his selection.

Yesh Atid

The name means There’s a future. The sensation of the previous elections in 2013 won 19 Knesset seats. The future of the party headed by ex-TV host and newsman Yair Lapid seems less bright the second time around. Lapid’s performance as finance minister was not a roaring success; most of the reforms promised by his centrist party haven’t materialized and the party’s electoral campaign this time round doesn’t seem to have caught fire, with most projections cutting its Knesset representation by at least one third. Over four decades, centrist parties like Lapid’s have an annoying trend (for them) to sprout up, grab a lot of seats first time round, and then fade into oblivion.

Kulanu

Moshe Kahlon, a former Likud politician who became popular for forcing cellphone carriers to slash prices when he was communications minister, has formed his own party (the name translates to “All of Us”). Kahlon returned to politics after a two-year break after leaving the Likud in 2013. A potential kingmaker if the election results are close, Kahlon’s platform is consumerism and his goal is the Finance Ministry.

Yisrael Beitenu

Not long ago, Foreign Minister Avigdor Lieberman’s party seemed to be a rising power in Israeli politics, adding locally-born voters to its original Russian immigrant voter base. But all that has changed with revelations of a police investigation into a major corruption scandal, involving kickbacks from local authorities allegedly channeled through the party’s top woman, Faina Kirschebaum, have caused a near-crash in its electoral stock. Lieberman says the probe is not serious and that his party has done no wrong. But with the Likud-Yisrael Beitenu joint ticket of 2013 dissolving and his relations with Netanyahu crashing, the party is much weaker than its former powerhouse self after Election Day.

The Joint List

Changes in the law raising the electoral threshold (the minimum percentage of the popular vote necessary to win any Knesset seats in Israel’s unique proportional electoral system) to 3.5% has compelled Israel’s Arabs’ small parties to run together in order to survive. (Other small parties whose only function had been to clutter the candidates’ lists have given up the chase this time, knowing they have no chance at all.) As for the Joint List, it may be that the whole list is greater than the sum of its parts, with projections for a gain of several seats beyond the outgoing Knesset’s combined 11. The appeal of the joint List could also draw away Arab voters, who in the past have supported Jewish political parties.

Three Ultra-Orthodox parties

The main interest of United Torah Judaism, the party of ultra-Orthodox Jews of Ashkenazi (Eastern European) origin, is obtaining government support for its social welfare and educational institutions. That is also an objective of Shas, the party of Middle Eastern-rooted Sephardi Jews, which has split in the wake of the death of its patron and spiritual leader, Rabbi Ovadia Yosef. Rivals Aryeh Der’i and Eli Yishai, both former ministers who have led the party at various times over the past two decades, have gone their separate ways. Der’i remains leader of Shas. Yishai has formed Yahad (Together), which he promises will be the “most religious, most right” party and tried to place right-wing radical Baruch Marzel, a follower of the late rabbi Meir Kahane, on his list of Knesset candidates.

Meretz

Israel’s leftist party seems likely to cling to its relatively small core of ardent supporters, but is unlikely to make waves in an Israeli electorate which, for better or worse, has drifted in a rightward, nationalist direction over the years. Meretz may also lose some voters to the effort to make Herzog’s Zionist Camp, the largest vote-getter, which would likely be given the first shot at forming the next government.

The Aftermath

Winning Knesset seats is just the first part of the election story. After consultations with the parties winning representation in parliament, President Reuven Rivlin then asks the leader with the largest bloc of support, which is not necessarily the largest single party, to try and form a new government.

Anyone who expects things to clarify themselves after the elections is therefore advised to think again. It’s only likely to get more complicated.

All Netanyahu’s Men

In the wake of last December’s firing of Yesh Atid and Hatnua party cabinet members which triggered the fall of his government, Prime Minister Benjamin Netanyahu named caretaker officials to run the vacated ministries. They are: Nimrod Sapir, 31, a lawyer who served as economic adviser to former finance minister Yuval Steinitz before 2013, at the Treasury. Eitan Tzafrir, an attorney, Communications. Harel Locker, immediate past director general of the Prime Minister’s Office, Education, Justice, Health, Social Welfare and Science. David Sharan, a former aid to Steinitz, head of the Prime Minister’s Bureau.

Full Steam Ahead

Prime Minister Benjamin Netanyahu appears to be determined to speak to a joint session of the U.S. Congress, despite the rising tide of controversy over his acceptance of House Speaker John Boehner’s invitation. The speech, in which the Israeli leader will warn about the dangers of a developing nuclear agreement with Iran, is scheduled to take place exactly two weeks before Israeli elections on March 17.

Netanyahu’s acceptance of the Boehner invitation without consulting President Obama is widely seen as taking sides with the Republican-controlled Congress. Obama will not meet with Netanyahu when he comes to the U.S., Vice President Joe Biden, who chairs the U.S. Senate, has said he has a prior overseas commitment and will be unable to attend, and a number of Democratic Party senators and House members have said they would not attend. The criticism has not been confined to Democrats: many Jewish leaders in the U.S. have expressed concern about the deterioration of Israel’s relations the snub represents (though U.S. Ambassador to Israel Dan Shapiro insists that ties between the two countries are as strong as ever), and commentators in Israel suggest that Iran is likely to interpret Obama and Biden’s reaction as representing a real shift away from traditional U.S. support of Israel.

There appear to be efforts to ease the burgeoning crisis. In early February, an unnamed source close to Netanyahu insisted that the Israeli leader had been told that Boehner invitation was bipartisan, not solely made by the Republican leadership. There were also suggestions that the format of the speech be changed; that instead of addressing an open and televised session of Congress, Netanyahu might reduce some of the tension by speaking in a closed session without direct media coverage, or that Netanyahu might make the same speech to the AIPAC, the Jewish pro-Israel lobby group in Washington.

Netanyahu continues to insist that he’ll deliver his message, whatever the reaction. The speech isn’t intended as a slap at Obama; he says he’s making it to protect Israel against an existential threat.

Netanyahu’s insistence may also be motivated by concerns about the electoral consequences back home in Israel from backing down and being seen as weak by his right-wing supporters. On the other hand, going full speed ahead with the speech, thereby exacerbating already stormy relations with the Obama administration, which still has almost two years in office, will become campaign fodder for his political opponents in the final stages of the election campaign.

New Army Head

Lt.-Gen. Gadi Eizenkot became Israel’s 21st chief of staff on February 16, succeeding Lt.-Gen. Benny Gantz. The immediate past deputy chief of staff, Eizenkot, previously commanded the Golani Brigade, the Bashan Armored Division, the Judea and Samaria Division, the IDF’s Operations Branch and the Northern Command. He also served as military secretary to then-prime minister Ehud Barak in 1999.

Ya’alon India Visit

Defense Minister Moshe (Bogie) Ya’alon was due to visit India in mid-February, the first such visit by an Israeli defense minister since the establishment of bilateral relations in 1991. The minister’s schedule included meetings with Indian officials and a visit to the Aero India Trade Show in Bangalore on February 18-21.

Border Tensions

Israel’s northern and Golan Heights border areas were on high alert in late January, after exchanges of fire between the IDF and Lebanese Hezbollah. The trigger for the skirmishes and attacks, which appeared to have died down in early February, was the killing of six militants, including a visiting Iranian Revolutionary Guard general, in an air attack on a convoy on the Syrian side of the Golan Heights border in late January. The following days saw several exchanges, including rockets fired at the Golan, an RPG and s small arms attack on an Israeli convoy on a road parallel to the border with Lebanon, and Israeli retaliation with air power and artillery. Also among the dead in the convoy was Jihad Mugnieh, 25, the son of Hizballah master terrorist Imad Mugnieh, who himself was killed in a mysterious 2008 explosion in Damascus. Both the Imad Mugnieh killing and the January convoy attack have been attributed to Israel, although Jerusalem has not acknowledged a role in either operation.

Meanwhile, Hamas is reportedly devoting its resources to rebuilding its rocket arsenal. According to a report in Haaretz, Hamas lost between two-thirds and three-quarters of its stock of rockets in last summer’s fighting. Difficulties in smuggling weapons into Gaza from Egypt (which blames Hamas for recent terror attacks in Sinai) have pushed Hamas to build its own rockets. At the same time, Hamas, whose reconstruction plans have been frustrated by unfilled promises of international aid, is short of cement and unable to divert building materials to rehabilitating most of the 32 attack tunnels damaged or destroyed by the IDF last summer.

In early February, groups affiliated with ISIS distributed videos showing the alleged decapitation of 10 men it said had spied for Israel in Egyptian Sinai, allegedly in retaliation for Egypt’s destruction of hundreds of homes on its side of the border with the Gaza Strip in order to double the size of the security strip along the frontier from 500 m to 1 km, and shut down tunnels used to smuggle arms, terrorists and civilian commodities into Gaza.

Richest Israelis

The Wertheimer family, which sold its Iscar cutting-blades company to U.S. mega investor Warren Buffett some years ago, topped the list of the richest Israelis on the international rich list published by Hurun, the Chinese equivalent of Forbes. Father Stef and son Eitan Wertheimer’s fortune is estimated at $3.5B. Second of the 13 Israelis on the list is diamond merchant Dan Gertler at $2.3B, followed by Bank Hapoalim and Carnival Cruise Lines heiress Shari Arison ($2.3B), shipping and chemicals baron Idan Ofer ($2.2B), media and entertainment’s Arnon Milchan ($2.1B), Delek owner Yitzhak Tshuva ($2B), Benny Steinmetz (diamond mining, engineering and real estate ($2B), Checkpoint Software Technologies’ founders Gil Shwed and Marius Nacht, each with $2B), gambling software entrepreneur Teddy Sagi ($1.9B), Michael Federmann, Elbit Systems, the Dan Hotels chain ($1.7B), Shaul Shani, the Swarth Group, high-tech investment ($1.5B) and Amdocs founder Morris Kahn ($1B).

Rabbi On Trial

Former chief rabbi Yona Metzger will stand trial for accepting about NIS 10M in bribes and keeping NIS 7M for himself, Attorney General Yehuda Weinstein ruled in mid-February. Metzger, the Ashkenazi (Jews of European origin) Chief Rabbi between 2003 and 2013, allegedly was bribed to influence his decisions as the highest rabbinical authority. He is also alleged to have siphoned off for his own use millions of shekels in donations made to charitable institutions.

The Economy

Surprising Figure

Contrary to earlier projections, the Israeli economy wasn’t paralyzed by last summer’s 50-day war in Gaza, Operation Protective Edge. Central Bureau of Statistics released in mid-January indicated that the economy actually grew by an annualized 0.2% in the third quarter, which included the time of the fighting. The CBS revised earlier estimates that the economy contracted by as much as 0.4% in QIII.

Deficit Lower

Larger-than-expected tax collections and lower spending resulted in Israel’s lowest budget deficit since 2008, according to Treasury reports. The deficit of about $7.6B amounted to 2.8% of the Gross Domestic Product, compared to the official prediction of 3% of GDP.

Projection Realistic?

The projected government budget for 2015, amounting to 2.5% of GDP, is realistic, according to a Bank of Israel report issued in early February. In an analysis of the fiscal situation prior to approval of this year’s budget, now delayed because of the elections, the central bank recommended an NIS 8B (about $2B) tax increase and an NIS 10B reduction in government expenditures.

The 2015 budget proposed by then-finance minister Yair Lapid passed its first reading in the Knesset before the dissolution of the parliament in December. It proposed a 3.4% of GDP budget deficit, although existing law set the target at 2.5%. Bank of Israel Governor Karnit Flug opposes a deficit of over 3%.

Since no budget was passed, government expenditures beginning on January 1 were limited to a monthly total of one-twelfth of the amounts in the 2014 budget.

Defense Spending Ratio

The ratio of Israel’s defense spending compared to the Gross Domestic Product is the highest in the world, according to a Tel Aviv University study released in mid-February. The survey, comparing expenditures in 2013, found that Israel spends 5.6% of GDP on defense. The U.S. spent 3.8%. France and Britain each spent just over 2.2%, Germany 1.4%, and Russia 4.1% of GDP on defense.

Kibbutz Exports

Exports of kibbutz industries continue to rise. In 2014 they totaled NIS 8.9B, up 5.5% from 2013, representing a 900% increase in the past 14 years. In addition, Huliot, the manufacturer of plastic pipes for construction belonging to Kibbutz Sde Nehemia, has invested NIS 14M in a new factory in India.

On Track

An Israeli-German-Swiss group has won an NIS 760M Israel Railways tender for a track on the new rail right-of-way to Jerusalem. The contract deals with planning, construction and maintenance of 46 km of track, together with support systems. Members of the Electra Bogl group are Israel’s Electra Ltd., Max Bogl Bauunternehmung of Germany and Signon Schweiz of Switzerland. Commercial operation of the high-speed line is expected in 2018.

Start-Up City

Global City, a subsidiary of the Tel Aviv Municipality, has begun a pilot project aimed at attracting entrepreneurs from abroad. The package includes free workspace for three months, professional support and counseling, free legal advice and assistance in dealing with Israeli governmental bureaucracy. Tel Aviv is currently home to 1,500 high-tech firms employing 43,000.

Turkish Trade

Despite the ongoing crisis in Israeli-Turkish relations, trade between the two countries is flourishing. Turkish press reports quoted by Haaretz say 2014’s bilateral trade amounted the $5.6B, more than double the $2.6B of 2009, the year of the Mavi Marmara Gaza-bound flotilla incident that strained relations. Turkey’s exports to Israel, totaling almost $3B, include steel, minerals and textiles, electrical machinery and vehicles.

India Venture

Israel’s Netafim, the drip irrigation specialist, is cooperating with India’s Megha Engineering and Infrastructure (MEIL) in a $120M irrigation project in the southern Indian state of Karnataka. The Israeli firm’s share of the venture, considered one of the world’s largest irrigation projects, amounts to $60M. It involves 7,000 farmers in 22 villages. Netafim has 22 subsidiaries operating in 11 countries around the world.

Minimum Wage Raised

Before disbanding for elections, the Knesset passed a law raising Israel’s minimum wage to NIS 5,000 (about $1,250) a month for full-time employment. Implementation is due to take place over two years, with the first stage beginning in April.

Finance & Investment

Private Equity Investment Up

Private investment equity funds invested $2.18B in 69 deals in 2014, up 10% from 2013’s $1.98B, according to a report by the IVC Research Center.

Two buyouts by foreign private equity funds accounted for 52% of investments in 2014: Apax Partners’ $650M buyout of Answers Corp., owner of Q&A website Answers.com and Oaktree Capital’s $475M buyout of utilities company Veolia Israel.

Big Plans

Kentaro Sakakibara of Samurai Incubate, which invests in early-stage start-ups, providing support in management, marketing, sales and human relations, plans to stay in Israel for 4-5 years and invest in about 100 Israeli companies. The Japanese businessman, who took up residence in Israel and established Samurai House in Tel Aviv last year, told The Marker, the economic supplement of Haaretz, that “Israelis are good at establishing the first percentage of innovation, which the Japanese can take to 100%.” Samurai’s fixed investment model: $100,000 for 10% of a company, at a valuation of $1M, a relatively low valuation that the seed fund, contends it will be able to increase exponentially.

$300 Million Raised

Four Israeli funds and companies raised a total of about $300M in one day, in late January. Vintage Investment Partners, a private equity fund of funds headed by venture capital veteran Alan Feld, raised $125M for its VIII Fund; Tel Aviv-based Singulariteam, which describes itself as a “super angel investor focusing on advanced, new and disruptive technologies” raised $100M; Kaminario, a storage specialist based in Yokne’am near Haifa and Newton, Massachusetts, raised $15M in addition to $53M raised in December; and Clicktale, whose technology optimizes visitor interaction on websites and is based in Tel Aviv, raised $35M from KKL, a U.S. private equity fund.

Teva Wins

The U.S. Supreme Court has ruled in favor of Israel’s Teva Pharmaceutical Industries in a case involving release of a generic version of Copaxone, Teva’s flagship multiple sclerosis drug. The 7-2 ruling delays the release of generic Copaxone by competitors, at least until September 2015. The ruling is significant because of Copaxone’s role in Teva finances: The drug has annual sales of $4B and reportedly produces $78M in monthly net profit for the Israeli Big Pharm.

Land Sale

Paz, the fuel company, is selling its 21.5%, 34-dunam (8½-acre) holdings in the Pi Glilot fuel depot north of Tel Aviv. Purchasers, who are paying NIS 250M for the tract on which they plan to erect 700 residences, are Canada-Israel (70%) and businessman Arye Adler (30%).

Teva Profits Flat

Israeli pharmaceutical giant Teva, based in Jerusalem and Petah Tikva, reported flat revenues of $5.2B and $20.9B respectively for QIV and all of 2014. Company CEO Erez Vigodman said the figures represented a solid base for future growth.

Nano-Textile Goes OTC

Nano-Textile, based in Nahariya north of Haifa, has filed to raise $3M on Wall Street’s Over-The-Counter (OTC) market. The firm, which recently changed its name from Bacterial Textiles, has developed anti-bacterial textiles for bed linen in hospitals and hospital staff clothing. Spread of infections has become a major problem; in the U.S. alone, an estimated 1.7 million patients a year pick up other infections during their hospital stays.

Billion-Dollar Baby

Taboola, developer of a widget for marketing content, has raised $147M in a financing round based on a company valuation of $1B. Investors in the round include Fidelity, Advance Publications (owner of Conde Nast), Groupe Arnault and LVMH. Headquartered in New York, Taboola’s client list includes USA Today, Fox Sports and the Chicago Tribune.

Bronfmans Return

Stephen Bronfman, son of Canadian billionaire Charles Bronfman, is bringing the family back to Israeli investment after a nine-year absence. Claridge, the Montreal-based investment firm founded by Charles Bronfman in 1987, and la Caisse of Canada, are setting up a new Tel Aviv firm to invest in high-tech companies.

Claridge closed down its Israeli operations in 2006 after selling control of the Koor Industries conglomerate to the IDB Group. It previously held large stakes in Teva Pharmaceuticals and the Osem food company.

Other members of the Bronfman family, whose original fortune comes from family patriarch Samuel Bronfman’s Seagram’s distilling and liquor company, have also invested in Israel. Matthew Bronfman, the son of the late Edgar, Charles Bronfman’s older brother, and other members of the clan have investments in Israel. The holdings of Matthew Bronfman, who sold his interest in Israel Discount Bank some years ago, include equity in the Ikea furniture company and the Supersol supermarket chain.

Mergers & Acquisitions

Bottomline-Intellinx

Bottomline Technologies of the U.S. has purchased Israeli company Intellinx for about $67M. Intellinx, which specializes in enterprise detection and prevention of fraud, is headquartered in Or Yehuda, near Tel Aviv, with a U.S. office in New Jersey. The company’s 200 customers in Israel and abroad include major government agencies, health organizations, and credit and insurance companies. Bottomline is a cloud-based payment provider with headquarters in Portsmouth, New Hampshire.

Amazon-Annapurna Labs

Amazon, the Internet bookseller and marketer, has acquired Israeli semiconductor developer Annapurna Labs. No details were released, but market sources estimate the price of Annapurna, based in Yokne’am near Haifa, in the $350M range. Founded by Avigdor Willenz in 2011, Annapurna says it is developing the next generation of semiconductors. According to press reports, Amazon may use the firm, its first Israeli purchase, as the basis for an Israeli development center.

According to Yediot Aharonot, Amazon is bringing hundreds of thousands of dollars-worth of equipment to Israel, including servers purchased from Cisco and security cameras for its new Tel Aviv offices.

Harman-Red Bend

Harman International Industries of Stamford, Connecticut, which specializes in audio and infotainment equipment, has acquired Israel’s Red Band Software for $170M plus an additional $30M in milestone payments. The technology of Red Bend, based in Hod Hasharon in the high-tech belt northeast of Tel Aviv, aids cellular operators remotely revised software and physical components of cellular phones.

Dropbox-Cloud On

Dropbox, the San Francisco-based provider of “cloud” storage of data on the Internet, has acquired CloudOn, a developer of remote-access Microsoft Office editing applications for distant computers without the Microsoft software and a similar service for Apple IOS computers. Purchase price for CloudOn, which is Drolpbox’s first Israeli acquisition, is estimated at around $100M.

Microsoft-Equivio

Software giant Microsoft has purchased Equivio, an Israeli specialist in document location using machine-learning technology, for an undisclosed sum. Various industry and press sources have very different estimates of the purchase price, ranging from a low of around $50M to a high, by the Wall Street Journal, of $200M. Equivio, based in Rosh Ha’ayin in the high-tech belt northeast of Tel Aviv, is Microsoft’s second recent Israeli buy: In November, it paid $200M for Aorato, an information-security specialist.

Ctrip-Travelfusion

Chinese online travel firm Ctrip has purchased Travelfusion, a U.K.-based, Israeli-owned aggregator of travel data including airlines and hotels for travel agents and ordinary customers. Reported purchase price is $160M. Travelfusion was founded 15 years ago by Israeli Moshe Rafiah, who held about 50% of its shares, and a group of Israeli investors.

Gazit Globe-Atrium

Gazit Globe, controlled by Israeli businessman Haim Katzman, has purchased an additional 13.9% of Atrium European Real Estate for a reported 229M euros (about NIS 1B). The additional shares bring the holding of Gazit Globe, a worldwide developer and operator of supermarket-anchored shopping centers, in Atrium to 54-55%.

Amdocs-Pontis Deal Mooted

Amdocs, the St. Louis, Missouri and Ra’anana-based developer and marketer of support software for communications firms, reportedly will purchase big-data analytics specialist Pontis. According to Calcalist, purchase price is in the $160M range. Pontis, founded in 2003, is based in Ra’anana, not far from the Israeli offices of Amdocs.

Amdocs reported revenues for October-December, the first quarter of the company’s fiscal 2015, of $906M, well within the predicted $895-$925M range and a 4.8% increase over the parallel quarter of the previous year.

Intuit-Porticor

Intuit of Mountain View, California, said it is purchasing Porticor, an Israeli cloud computer security specialist. Purchase price was not announced. Intiit’s previous Israeli purchase was Check, for which it paid $360M in May 2013.

Israel Chemicals-Prolactal

Israel Chemicals has signed an agreement to purchase Prolactal GmbH of Hartberg, Austria and Engelsberg, Germany, a leading European producer of dairy proteins and other inputs for the food and beverage industry. Sale price was estimated at 110-115M euros.

Perion-Make Me Reach

Perion Networks, a Tel Aviv-based mobile marketing specialist, has acquired MakeMeReach, a French developer of social media advertising, for a reported $10-$15M. Seven months ago, Perion acquired Grow Mobile of the U.S. for $17M in cash plus $25M in milestone payments.

Bezeq-Yes Merger

The board of directors of Bezeq Israel Communications has approved the company’s purchase of Eurocom’s 50%-plus stake in the YES cable TV provider for NIS 680M plus milestone payments, practically merging the two.

Mobile Network Group-Appsfire

Appsfire, an Israeli developer of technology of mobile advertising and search engine technology, has been purchased by the French Mobile Network Group for $30M. Appsfire has headquarters in Paris, offices in California and a development center in Tel Aviv.

Yelp-Eat24

Yelp of the U.S., which specializes in restaurant reviews, has purchased Israeli online food ordering and delivery service developer Eat 24 Hours for a reported $134M. Founded in 2008, Eat 24’s client list includes over 20,000 restaurants in the U.S.

Science & High Technology

Investment Record

Israeli high-tech and life-sciences firms set a fundraising record in 2014 of $3.4B by 688 firms, according to an IVC-KPMG report. Last year’s figure was 46% higher than the $2.3B raised in 2013.

The year was topped off by the fourth quarter, when 184 companies raised $1.1B, the largest single quarter since 1999. Largest was Mobileye, the Jerusalem-based developer of automobile threat-detection systems, with $1,020B, followed by multilingual instant messaging firm Viber, sold last February for $900M. Other large deals include fabless chipmaker Wilocity, at $390M; financial software maker Check, $360M and Superderivaties, $350M.

During the same period, Israeli venture capital funds raised $914M, the highest amount since the 2008 global economic crisis.

The trend continued after the start of the year. During one week in January, a half-dozen Israeli start-ups raised a total of more than $100M, most of it over a two-day period, according to a report in Haaretz economic section.

Fast Charge

StoreDot, based in Ramat Gan adjacent to Tel Aviv, says its nano-based energy storage technology can be used to create next-generation batteries that can be charged much more rapidly than current devices. Company founder Dr. Doron Meyersdorf says its goal is 30-90 seconds.

Kite Takes Off

Los Angeles-based Kite Pharma, founded and directed by Israeli-American oncologist Dr. Arie Belldegrun, hasn’t collected any revenues yet. But prospects for the clinical-stage bio-pharmaceutical firm, which is developing novel immunotherapy products based on T-cell therapy that restore the immune system’s ability to recognize cancer cells, seem bright enough to soar to a $3 billion company valuation less than a year after its initial public share offering on NASDAQ.

Amdocs India Plans

Amdocs, the global provider of support and billing services for communications companies based in St. Louis, Missouri and Ra’anana, in the high-tech belt northeast of Tel Aviv, is targeting new business in India as part of its growth strategy for 2015. Amdocs CEO Eli Gelman said he expects India, where his firm does not yet have many operator customers, to be “bigger for us in 2015. We may have new names.” Gelman also mentioned plans for expansion in Latin America and Southeast Asia.

NICE Earnings

Israeli data and voice security and analysis specialist NICE Systems broke the $1B revenue in 2014. Record fourth quarter revenues of $294M pushed the Ra’anana-based firm’s 2014 revenue to $1,024B, up 6.5% from the previous year.

Ormat Plants

Geothermal energy specialist Ormat Technologies says that its U.S. subsidiary and infrastructure funds managed by Northeast Capital have agreed on $175M in financing a joint venture to build geothermal power plants in Hawaii and Nevada, and nine power plant units in northwestern United States.

Solar Field

Brenmiller Energy, based in Tel Aviv, plans to build a solar field near Dimona that will generate energy for about 20 hours a day. The field, which will cost NIS 300M, will combine solar thermal electricity generation with advanced underground system storing heat for use at night. Most existing solar thermal and photo-voltaic generation systems can only operate during daylight hours.

Brenmiller Energy is no newcomer to the solar energy field. Its CEO, Avi Brenmiller, formerly headed solar thermal specialist Solel, sold to Siemens in 2009 for $418M.

Power in Ethiopia

Israel’s AORA, based in Rehovot southeast of Tel Aviv, has signed an agreement with Ethiopia’s Ministry of Water, Irrigation and Energy to provide hybrid solar-biogas generated electric power to rural communities in the African country. Construction of the first pilot plant in Ethiopia is expected this year.

The AORA technology, developed at the Weizmann Institute of Science in Rehovot, utilizes both solar radiation and most liquid or gaseous fuels, from natural gas to biogas and biodiesel. Housed in the company’s tulip-shaped tower, it runs either in wholly solar mode or on gas, when there’s not enough sunlight to generate electricity, guaranteeing a full 24-hour, all-weather power supply.

ALS Progress

Israel’s BrainStorm Cell Therapeutics says that clinical tests of its adult stem cell treatment for amyotropic lateral sclerosis (ALS, also known as Lou Gehrig’s Disease, has slowed progression of the disease in most patients. In the test, a single dose of BrainStorm’s NurOwn treatment was administered to 14 ALS patients at Jerusalem’s Hadassah Medical Center, with a 92% success rate in slowing degeneration of the nervous system.

Late last year the U.S. Food and Drug Administration (FDA) gave NurOwn its “fast-track” designation for drug development. The stem cell product is also undergoing Phase 2a trials at three locations in the U.S., with plans for repeated doses rather than a single treatment.

High Ranking

Israel ranks fifth in the just-released Bloomberg Innovation Index, which measures six categories involving technology-based industry. South Korea was first in the annual rankings, followed by Japan, Germany and Finland. The U.S. was sixth, just after Israel, China 18th and India was not ranked in the top 50.

Possible Link

A Tel Aviv University team says it may have found a genetic link between autism and Alzheimer’s disease. Team leader Prof. Aliza Gozes told The Times of Israel online newspaper that ADNP, an activity-related neuroprotective protein, may provide the key to developing treatments for both disorders. In tests on laboratory mice, lack of ADNP had different effects on males and females, causing difficulties in object recognition in younger males and dementia-like symptoms in older females.

Verizon Prizes

Israeli start-ups captured three of 12 prizes in the worldwide Powerful Answers contest sponsored by Verizon, the U.S. telecom firm. The winners: Sesame Enable, which allows individuals who cannot use their limbs (due to paralysis, ALS, Parkinson’s etc.) to activate and use smartphones with a slight head movement; Voiceltt’s Talkltt app, which interprets speech by people with severe speech impediments; and HopOn, which lets bus passengers pay fares with cellphones.

Aerospace & Defense

IAI Offering Mooted

The Government Corporations Authority has announced plans to privatize 49% of government-owned Israel Aircraft Industries in a stock market offering by 2016, according to a report in Haaretz.

IAI board chairman Rafi Maor confirmed the plan in an interview with Defense News, but did not specify a date. Maor said that the public offering would take place in Tel Aviv, although this company has also made preparations to offer its shares on the NASDAQ exchange in New York.

F-16 Maintenance Contract

Elbit Systems has been awarded an 11-year, $90M Defense Ministry contract to maintain all of the Israel Air Force F-16 squadrons. Under terms of the contract, the private defense contractor will establish a maintenance center dealing with all the aircraft’s systems except body and engine for the IAF F-16 A/Bs (Netz), F-16 C/Ds (Barak) and F-16Is (Sufa) aircraft.

More Elbit Deals

Elbit Systems has won a $100MDefense Ministry contract to procure six new firefighting aircraft manufactured by Air Tractor and operate a 14-plane firefighting squadron including eight planes previously purchased by the defense contractor. The 8-year contract covers upgrades of infrastructure and maintenance.

Elbit was also awarded Ministry of Defense contracts valued at $117M to provide command, control, computer, communications and intelligence systems for the next generation of the Digital Army, the Israel Defense Forces computerization master plan, and for $54 million worth of advanced electro-optical systems from its El-Op subsidiary.

Brazilian Deal

Elbit Systems will upgrade four C-1A aircraft for the Brazilian Navy, at a cost of $106M. The work will be done at the San Antonio, Texas facility of M7 Aerospace, a subsidiary of the private Israeli defense contractor.

V-22 Proposal Freeze Sought

Israel is seeking U.S. consent to freeze the terms for purchasing six V-22 Osprey tilt-rotor aircraft. The deal was postponed due to budgetary constraints in the aftermath of last summer’s Operation Protective Edge in Gaza. Israeli sources described the original U.S. offer, which expired in December, as extremely generous; it provided for substantial reductions in the $1.3M cost of the aircraft and deferred payment against future U.S. military aid.

Nanosatellites Planned

Israel plans to launch three nanosatellites whose task will include searching out signals from people missing on Earth, the Israel Space Agency has disclosed. The three satellites, each consisting of six cubes measuring 10 cubic cm. each, are due to be launched in 18 months from the Kourou Islands in French Guinea.

The nanosatellites were developed by research at the Technion – Israel Institute of Technology, Haifa, in cooperation with defense contractors Rafael Advanced Defense Technologies and IAI. They were developed by a team headed by Technion Prof. Pini Gurfil.

IDF Appointments

IDF Chief of Staff Lt.-Gen. Benny Gantz and his successor, Maj.-Gen. Gadi Eizenkot, have named Maj.-Gen. Nitzan Alon as the new head of the Operations Branch, replacing Maj.-Gen. Yoav Har-Even, who has held the position for the past two and a half years.

Other appointments, all approved by Defense Minister Moshe Ya’alon, include Maj.-Gen. Roni Numa to replace Alon as head of the Central Command and Maj.-Gen. Tal Russo to head the Depth Command. Brig.-Gen. Yoel Strick, currently commander of the company and battalion commanders’ course, will be promoted to major-general and become Home Front Command chief, replacing Maj.-Gen. Eyal Eizenberg. Brig.-Gen. Tal Heyman was promoted to major general and named head of the Northern Division.

In addition, Brig.-Gen. Eli Ben-Meir has been appointed head of the Intelligence Corps research division, succeeding Brig.-Gen. Itai Broon.

Israel Inside India’s Tejas

Hindustan Aeronautics Ltd. has provided the first of its line of fourth-generation LCA Tejas aircraft to the Indian Army as part of a contract that will eventually reach a value of $3B. The aircraft reportedly contains many advanced Israeli-made components, including Elta EL/M 2032 multi-mode radar, a combat package developed jointly with Elisra, and Python and Derby rocket systems from Rafael Advanced Defense Technologies.

Carrier’s Cannon

Australia’s new HMAS Canberra helicopter carrier, launched in November, is fitted with four Typhoon 25-mm remote weapons systems (one at each corner of the flight deck) from Israel’s Rafael Advanced Defense Systems. The vessel is the first of two ships based on Navantia of Spain’s Juan Carlos I, built for the Spanish navy; the second, HMAS Adelaide, due to be launched later this year. The two landing helicopter dock (LHD) vessels are the largest ships ever commissioned by the Australian Navy.

Iron Dome Details

In a 2014 year-end interview, reserve brigadier general Danny Gold, head of the team that developed Iron Dome, said that 300-400 people had worked around the clock for three years in developing the missile defense system. The team, Gold added, developed an algorithm that had never existed before.

Gas Mask Distribution Halted

The security cabinet, headed by Defense Minister Moshe (Bogie) Ya’alon, decided in December to halt the distribution of gas mask kits to Israelis and shut down the production lines. The decision comes in the wake of intelligence assessments of a diminished threat from the greatly reduced stock of chemical weapons in the hands of Syrian President Bashar al-Asad’s forces.

Combat Commander

Lt.-Col. Oshrat Bachar, 37, spoke of her “one child at home and 550 soldiers in the field” and how she balances between being the IDF’s first female commander of a combat battalion and the mother of an 8½-year-old daughter, in an interview conducted six months after her appointment. Bachar, whose husband is also an IDF officer, commands Field Intelligence Battalion 727 (Eitam), which is posted to the sensitive Israeli-Egyptian border.

New Defense Contractor

Former IAI head Itzhak Nissan has founded Meteor Aerospace. The company, founded together with Hezi Bezalel, deals in unmanned systems and principally targets Asian markets. According to Globes, its senior management is made up of former senior managers in Israel’s defense establishment and IAI.

Armored Vehicle Sale

IAI has signed contracts with three African customers for a total of 100 RAM armored vehicles. Names of the military customers were not disclosed, but foreign press reports indicate that Senegal is one of them. The vehicles are manufactured at the plant of IAI’s Ramta division, located in Beersheba.

IAI’s New Aircraft

IAI has introduced ELI-3360, a maritime patrol aircraft based on a modified Bombardier Global 500 business-jet platform. Designed by IAI’s ELTA Group to provide maritime domain situational awareness and maritime superiority, the aircraft provides sophisticated surveillance, reconnaissance and armament installed on a business jet.

IAI’s Recon System

IAI says it has completed advanced testing on its M-19HD automated surveillance and reconnaissance, designed to be mounted on unmanned aerial vehicles such as its Heron and on manned aircraft, including combat helicopters.

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