General News Summary
State – Or Non-State – Of the Peace Process
The United States says that it is moving ahead with the Israeli-Palestinian peace plan it is preparing, despite Palestinian President Mahmoud Abass’ statements that President Trump’s recognition of Jerusalem as Israel’s capital has disqualified the Americans from playing any role as a Middle East mediator. For his part, Trump has threatened to retaliate for the Ramallah regime’s refusal to cooperate, with drastic cuts in U.S. aid to the Palestinians.
The fate of the still-unpublished peace plan being formulated by son-in-law Jared Kushner and Jason Greenblatt, the U.S. administration’s envoy to the region, is very much an open question. Abbas, speaking to a Palestinian forum in mid-January, called it “the slap of the century,” railing against Trump. “Damn your money,” Abbas, who pointedly refused to meet Vice President Mike Pence when he visited the region in late January, said. “He (Trump) said, ‘I will give you a peace deal.’ The deal turned out to be a mess. He said ‘We will not play for the Palestinians because they stopped the negotiations.’ Where are the negotiations?” The Palestinian called both the U.S. ambassador to the UN, Nikki Haley, who threatened countries voting for the Security Council declaration declaring Trump’s Jerusalem recognition null and void and David Friedman, the U.S. Ambassador to Israel, “a disgrace” to any administration “that wants to respect itself.”
Blaming Israeli government policies for creating a stalemate, Abbas also questioned Israel’s historical claims to the Land of Israel, calling it the product of a European colonial enterprise, another non-encouraging sign. The White House said that it had not been in contact with the Palestinian leadership in the two months following Trump’s December 6 announcement on Jerusalem. That included Abbas’s refusal to meet Mike Pence during the Vice President’s mid-January visit to Jerusalem.
Netanyahu responded to the Palestinian leader’s statements by saying that Abbas’s extreme comments had actually helped Israel make its case. By effectively refusing to engage in serious peace negotiations over issues including borders, the Israeli leader said, Abbas “exposed what we have been saying all the time, that the root of the conflict is the basic refusal to recognize the Jewish state in any borders.”
Trump, speaking at the Davos conference in mid-January, attacked the Palestinian refusal, saying that the U.S. “will not have anything to do with them (the Palestinian Authority) any longer” unless it shows that it wants to make peace. The U.S. leader did not conceal how angry he was for the snub to Pence, saying the Palestinians had “disrespected” the U.S. and saying that his administration would withhold funding to them “unless they sit down and negotiate peace.” demanding that “respect has to be shown to the U.S. or we just are not going any farther.”
Despite the high-octave tone of statements by various leaders, Greenblatt, in Tel Aviv for a late-January conference on security, tried to take an optimistic note, saying he had seen “a growing receptivity” in the region to peace efforts. At the same time, Greenblatt attempted to allay fears to varying degrees on both sides, that what the Trump administration deems as its fresh approach to Israeli-Palestinian peacemaking involves forcing a solution on either side. The U.S., he said, would support whatever the two sides can agree on, “and not impose a deal on either party.”
Ambiguity steps in, however, Greenblatt’s conciliatory tone is weighed against other statements stemming from Washington in general and the White House in particular. Trump has indicated, on more than one occasion, that he’s prepared to turn on the pressure, political and economic. He indicated as much in his State of the Union message in late January when he asked Congress “to ensure that American foreign assistance dollars always serve American interests,” going only to the U.S. friends and not its enemies.
Much depends on the actual content of the American plan, when – and if – it eventually emerges. Palestinians fear it will tilt in Israel’s favor, partly because Greenblatt and Kushner are both Orthodox Jews with a record of supporting West Bank settlements. It might be wise for them to note that the Trump statements on Jerusalem as Israel’s capital, anathema to them because of their own claims, significantly avoided committing the U.S. on other key issues including the possibility of a Palestinian capital in the city and the possible division of it as well, territorial and border issues, settlements and the “right of return” of Palestinian refugees and their descendants.
Will any plan eventually produced by Greenblatt and Kushner take positions that neither side perceives as leaning too far towards the other side, leaving sufficient room for negotiation on the potentially deal-breaking core issues? Can the Trump administration exercise sufficient economic leverage – on either or both sides – to get past the differences that have scuttled attempts at negotiations over half a century? It takes a dedicated optimist to believe that’s still possible.
Netanyahu, Modi Revive Spike Deal
Revival of the previously canceled Indian $500M order for Rafael Advanced Defense Systems Spike anti-tank missiles and pledges of even closer cooperation between the two countries capped Prime Minister Benjamin Netanyahu’s first-ever visit to the Subcontinent in mid-January. The six-day visit highlighted close personal ties between the Israeli leader and his Indian counterpart, Prime Minister Narendra Modi, who spent an unusually long four of the visit’s six days at Netanyahu’s side.
The Spike had been chosen over the U.S.-made Javelin, made by Texas Instruments and Martin Marietta, after a long and involved Indian procurement process covering almost a decade. After New Delhi had finalized the order for 8,000 Spikes and 300 launchers in 2016, Rafael opened a new production plant for them near Hyderabad, in a joint venture with India’s Kalyani Group, in August. But in early January, about two weeks before Netanyahu’s arrival, Rafael was informed that the deal was off. The Indian Express newspaper said the cancellation was due to the “adverse impact” it would have on development of indigenous Indian-made weapon systems. Other press sources, however, say the Indian Army prefers Spikes because they are battle-tested, and that its range is longer than the Indian-made Nag missile.
Even during the short period during which the Spike deal seemed to have been called off, other contracts for Israeli arms, including a contract for Barak 8 air-defense missiles for the Indian Navy, seemed to have been unaffected. In 2017 Israel, whose defense sales to India over the last few years have averaged more than $1B annually, is said to have become India’s largest arms supplier.
During his visit, Netanyahu also made stops at the Taj Mahal House Hotel and the Chabad Jewish Center in Mumbai, two focal points of the 2008 attacks by a Pakistani-based Muslim terrorist organization and visited with stars and executives of Bollywood, India’s flourishing film industry. The Israeli leader, who brought an entourage of about 130 people with him, engaged in discussions on a wide range of issues, including bilateral trade, cooperative high-tech development and technology incubator, plus academic and agricultural cooperation.
A series of agreements signed in 2017 had already strengthened technology and development ties between Israel and India. These included the 5-year, $40M Israel-India Technological Innovation Fund and the India-Israel Innovation Bridge, which brings together entrepreneurs and start-ups from the two countries in partnership projects in the fields of agriculture, health and water.
Prior to his departure, Netanyahu backed a move to extend the residence of Indian diamond merchants working in Israel and their spouses beyond the year they are now permitted to stay in the country without renewing their permits. According to Economics Ministry statistics, about 100 Indian citizens work in 50 Indian companies operating at the Israel Diamond Exchange in Ramat Gan.
Netanyahu-Putin and a Syrian “Watershed”
Prime Minister Benjamin Netanyahu has described his conversation with President Vladimir Putin in Moscow on January 28 as a “watershed” moment, saying he had made it clear to the Russian leader that if Iranian entrenchment in Syria isn’t stopped “we (Israel) will stop it…We are already acting to stop it.”
Netanyahu’s comments came after a one-day visit during which he also told Putin that Israel also considers Iranian manufacture of precision weapons in Lebanon “a grave threat” that it cannot tolerate. At about the same time, Defense Minister Avigdor Lieberman said that Israel was using “all the options,” including a large-scale diplomatic campaign and “political leverage,” to block Iranian missile production in Lebanon.
The Moscow visit, for Netanyahu’s 7th face-to-face with Putin in the last two years, came only a few days after he had met with U.S. President Donald Trump at the Davos economic conference. Israel’s attitude on Syria and Iran was discussed with both world leaders, and Netanyahu said that both “understand” Israel’s concerns and positions.
Rockets and Retaliation
Intermittent rocket and mortar fire from the Gaza Strip continued into southern Israel in February, usually followed by retaliatory strike on terrorist targets linked to the attacks. The January-February fire was a continuation of the mild upsurge in the last month of 2017, a year in which the IDF reported 35 attacks, more than either of the previous two years but dwarfed by barrages of thousands during 2004’s Operation Protective Edge.
Though the attacks have raised tension in Israeli communities along the Gaza border, which is in itself a serious concern, indications are that neither side is interested in escalation into a large-scale conflict. Israeli military sources attribute increased rocket fire to the desire of Islamic Jihad and Salafist organizations to thwart efforts for a reconciliation between Gaza’s Hamas rulers and the Palestinian Authority in the West Bank, in retaliation for Israel’s destruction of several terror tunnels from Gaza into its territory and for Israel’s cross-border response to previous rocket fire. There have also been suggestions that Iran has been asking its intermediaries, and particularly Islamic Jihad, to increase regional tensions as a means of diverting attention from the wave of anti-regime protests that have swept Iran itself.
Another factor in the equation is that Israel seems to be finding an effective response to the cross-border tunnel threat, through a combination of massive subterranean earthworks along the border area and improved detection technology. Hamas is clearly frustrated by the fact that completion of the new security barrier, expected by the end of 2018, effectively puts an end to the massive strategic project in which it has invested hundreds of millions and vast human resources over the last decade or so.
Secret Sinai Air Strikes
Israeli and Egyptian officials have so far declined to confirm or comment on a February 3 New York Times report claiming that unmarked Israeli planes and unmanned aerial vehicles have carried out more than 100 strikes on Islamic State-linked terror groups in Egypt’s Sinai Peninsula over the last three years. The strikes, inspired by Israeli concern over IS close presence and in cooperation with the Egyptian campaign against insurgent forces in Sinai, were carried out with the express permission of Egyptian President Abdel Fattah al-Sisi, the newspaper said.
The report, which the Times said was based on conversations with seven current or former British and American officials, said that the Israeli strikes have been kept secret by Sisi, who has also kept the press out of northern Sinai by classifying it as a closed military zone. The paper said the collaboration began after IS forces brought down a Russian airliner on route from Sharm al-Sheikh to Moscow, killing all 224 people aboard, calling it “the most dramatic evidence yet of a quiet reconfiguration of the politics of the region.” It said that shared concerns “have quietly brought the leaders of several Arab states into a growing alignment with Israel, even as their officials and news media continue to vilify the Jewish state in public.”
Although Israel has refrained from commenting on the report, it can be viewed in the context of Prime Minister Netanyahu’s comments in the past few years about an ad hoc coalition with moderate Arab states facing threats from Iran and Islamic terrorism and what he called “the forging of new ties, many of them discreet.”
Prime Minister Benjamin Netanyahu continues to insist that three police investigations involving him “will find nothing, because there is nothing.” But despite Netanyahu’s repeated denials, the police probe into the most potentially damaging of the three cases, the possible corruption in the 2B euro purchase of submarines and surface ships from Germany, seems to be getting uncomfortably close to the Prime Minister’s Office.
Police were due to interrogate both Netanyahu and National Infrastructure Minister Yuval Steinitz in connection with the case, though neither is a suspect in the affair at this stage. Among those under suspicion, on the basis of some of the information given to police by state witness and former Israeli representative of German ship maker ThyssenKrupp, Michael Ganor, include David Shimron, Netanyahu’s kinsman and personal lawyer and Shimron’s law partner and frequent personal diplomatic envoy Yitzhak Molcho, former Netanyahu bureau chief David Sharan, former Israel Navy commander Eliezer (Chini) Marom, and Avriel Bar-Yosef, one-time deputy head of the National Security Council.
Police have yet to make a recommendation on the results of their inquiries. When they do, Attorney General Avichai Mandelbit, who oversees the investigation, must decide whether a criminal proceeding is warranted.
The Netanyahu Tapes
Prime Minister Benjamin Netanyahu was embarrassed in January by two recordings of conversations with members of his family. On both occasions, the prime minister went public in responding, charging that the embarrassing recordings were persecution, bloodshed and shaming, and that they were released as part of a media campaign seeking to force him out of office.
Public reaction to both recordings followed expectable lines, with supporters arguing that they were invasion of privacy into family affairs that have nothing to do with the prime minister’s performance in office. On the other side, thousands of demonstrators who have come out on Saturday nights in Tel Aviv to rally against corruption are quick to cite the Netanyahu family’s behavior as a prime symptom of what ails Israel’s governance.
GDP Up 3% in 2017
Israel’s Gross Domestic Product rose by 3% in 2017, according to preliminary figures published by the Central Bureau of Statistics on January 1. GDP rose by 4% and 2.6% respectively in 2016 and 2015. Taking the population growth of 1.9%, Israel’s per capita GDP was up slightly less than 2%, similar to the 1.9% in OECD member countries, according to a report in Globes Hebrew business daily.
Debt-GDP Ratio Lowest Ever
Preliminary estimates published in late January put the ratio of government debt to Gross Domestic Product at 59.4%, the lowest ever and the first time the figure has been under 60%. The ratio rises to about 61% if local government debt is included. Much of the improvement is due to larger than anticipated tax revenues in 2017.
CPI up only 0.4% in 2017
Israel’s Consumer Price Index rose by only 0.4% in 2017, the fourth consecutive year without significant inflation. The year was capped with an increase of 0.1% in December, after falling by 0.3% in November. After negative inflation of 0.1% in 2014, 1% in 2015 and 0.2% in 2016, the cumulative rise in the CPI over the last five years amounts to only 0.8%.
$100 Billion in Exports
Initial Israeli and International Cooperation shows that the country’s exports will top $100B, up 5% from the previous year. Total exports of goods and services, without calculating start-up companies and diamonds, were up 6% to $92B. Exports of goods were $11.5B to the U.S. and $16B to the European Union.
According to the report, Teva Pharmaceutical Industries remained Israel’s largest exporter despite its financial troubles and plans for large-scale dismissals and the closing of several manufacturing facilities. Over the first six months of 2017, exports of pharmaceuticals, which are mostly Teva, amounted to $6.8B, compared to $6.3B in the parallel period of 2016. The second largest exporter, Israel Aerospace Industries (IAI) reported a record year with contracts valued at $5.5B and an order backlog of over $11B billion. Intel, Oil Refineries Ltd. and HP Indigo rounded out the top five exporters.
Forex Reserves Rise
Israel’s reserves of foreign exchange amounted to a record $113B, the Bank of Israel reported at year’s end. The reserves, which represent 32% of Gross Domestic Product, were up about $930M in the month of December.
Government Company Revenues
Israel government-owned companies had revenues of almost NIS 2.3B (slightly more than $500M) in the first nine months of 2017, according to a report released in early January. The Government Companies Authority estimates that total revenues for 2017, when calculated, will add up to around NIS 6B, about double the NIS 3B estimate given at the start of last year.
Hotel Occupancy Up
Hotel occupancy by foreigners rose 23% to 10.6 million in 2017, according to a report in Globes. The paper also cited Israel Airports Authority figures indicating a 16% rise in passenger traffic at Ben-Gurion International Airport last year.
Eilat Tourism On The Rise
Tourism Ministry officials expect the ministry’s winter campaign to increase the number of European tourists to Eilat, Israel’s resort city on the Red Sea, from 77,000 in the preceding year. The increase has been attributed, among other things, to special grants to airlines which have stimulated a weekly increase of direct flights to Eilat by 40-50 a week. Airlines flying directly include Finnair, Ryanair, Wizz Air, Ural, Transavia, and SAS. Most of the direct flights are from Russia.
D&B Official High On Israel
The Israeli economy is in its best situation since the 1948 War of Independence, even though public expenditures exceed the budget, says Tzach Berko, deputy general manager of Dun & Bradstreet Israel, according to a report in Ma’ariv newspaper. The paper says that a record 57,000 new businesses opened in Israel last year, up 2.6% from 2016, with the commerce and services branch accounting for more than 80% of new businesses.
Berko called the huge increase in government revenues from taxes the biggest story of the Israeli economy, while warning that much of the increase was “due to one-time events and not connected to real expansion.” He noted a slowdown on the residential home market, which directly or indirectly accounted for 1.2% of the growth, and its potential effect on a number of other branches, including electrical appliances, furniture and kitchens.
Supermarket Law Passes
A law to prevent convenience stores from remaining open on Saturday, the Jewish Sabbath, passed the Knesset in early January. The bill is a project of Interior Minister Arye Deri, who heads the ultra-Orthodox Shas party, which seeks to preserve Saturday as a day of rest.
2019 Budget Gets Cabinet OK
The Netanyahu government approved the State Budget for 2019 in mid-January, the first step in a long process, which requires passage by the Knesset, Israel’s parliament. The NIS 397.3B ($117B) spending plan includes a shortened workweek, tax cuts and increased state assistance for the disabled, and allocation for the Sports and Culture, Science, Labor and Welfare, and Agriculture ministries. Largest allocations were earmarked for Defense (NIS 63B), Education (NIS 60B) and Health (NIS 38B).
Sales of kibbutz industries reached about NIS 44B in 2017 according to figures released by Kibbutz Industries Association CEO Ophir Liebstein. Much of the increase was due to rising domestic sales.
Teva Cuts Director Pay
Teva Pharmaceutical Industries says it has reduced remuneration for company directors by 50%. The move came in the wake of the financially troubled pharma to dismiss about 14,000 employees worldwide. Teva has been burdened with excessive debt since it purchased Acquavis from Allergan for about $40B in 2016.
New Air Agreements
Israel has signed new aviation agreements with Switzerland, South Africa, Chile, Vietnam, Canada, Dominican Republic, Uganda, Tanzania, Jordan and the UK (the latter effective after Brexit). The agreements were signed at an early-January civil aviation conference in Sri Lanka.
EU to Fund Pipeline Planning
The EU has allocated 34.5M euros to complete planning of EastMed, an undersea pipeline that will connect Israel’s offshore Leviathan gas field with Crete and Italy. The pipeline, which will pass through Cyprus territorial waters, was one of a group of sustainable energy projects approved by the European Commission in Brussels in late January. Construction of the link bringing gas from Leviathan and the Cypriot Aphrodite field, which is due to begin in 2021, will take four years.
According to a report in Globes, Israel may already have lined up its first customer for the piped gas from Leviathan. Bulgarian Energy Minister Temenuzka Perkova has reportedly expressed interest in the gas, in a meeting with Israeli National Infrastructure and Energy Minister Yuval Steinitz and that her country might cooperate with Greece in a pipeline that would connect with the EastMed pipe. Bulgaria currently buys natural gas from Russia’s Gazprom.
Aluminum Plant Mooted
A feasibility study for construction of a NIS 4B aluminum plant and natural gas-powered electric generating station is nearing completion. Yitzhak Tshuva, who controls the Delek Group, considering the investment, discussed the subject in late January with Economy and Industry Minister Eli Cohen. Possible locations for the plant in southern Israel are Ramat Hovav and Mishor Rotem. Eilat, a third option, is less likely because it currently lacks suitable infrastructure.
Heavy rainfall in late January has not stopped the threat of a severe water crisis, Israeli experts have warned. Even if rainfall in the remaining months of the wet winter season proves sufficient to avoid declaration of a fifth consecutive drought year, Israel Water Authority and Meteoroid government water company officials note that levels of underground aquifers and of Lake Kinneret, the country’s main water reservoir, are much lower than they were a decade ago. According to a report in Haaretz newspaper, the two official water bodies have formulated a $2.2B plan to ensure sufficient water for domestic and farm use for the next 30 years. Although Israel’s water supply has been increased with the construction of several salt-water desalination plants along the Mediterranean coastline, officials say the situation in the Western Galilee, which does not yet have such a plant, is cause for special concern.
Investments & Finance
Three Seek Bezeq Control
Three main bidders have emerged in the battle for control of Bezeq, Israel’s largest telecom provider. The trio includes Eduardo Elsztain, the Argentine-Jewish real estate investor who acquired Israel’s IDB Group four years ago; brothers Naty and Ofer Saidoff, Israelis from Los Angeles with large real estate holdings; and Hen and Tzahi Neuman, brothers whose holdings include the Alon Group, automotive and high-tech companies. All three are seeking control of the Eurocom group, Bezeq’s principal shareholder, whose owner, Shaul Elovich, faces an Israel Securities Authority investigation for alleged stock-price manipulation and other offenses. According to Globes, Eurocom’s creditors are due to decide on the winning bidder sometime in February.
Tech Exits More Than Double
The value of high-tech exits more than doubled in 2017, according to a report by the PwC accounting and consultancy firm. The total value of exits, including merger-and-acquisition deals and initial public offerings reached $7.4B, up 110% from 2016 $3.5B, The PwC figure did not include two mammoth exits, the sales of automobile safety specialist Mobileye to Intel and of NeuroDerm to Mitsubishi Tanabe Pharma. Those two sales, which would have boosted the exit figure to over $23B, were consummated in 2017, but had been calculated as exits in earlier years.
New Playtika Fund
Playtika, the Israeli games developer, has established a new $400M fund for investment in mobile and Internet entertainment. The fund, which will also invest in companies specializing in consumer products, aims to work with profitable or near-profitable firms that already have revenues in the $10M.
100 Investments Planned
Our Crowd, the Jerusalem-based global crowdfunding firm founded by venture capitalist Jon Medved, says it plans to invest in 100 early-stage companies over the next decade. Investments will be channeled through its Labs/02 incubator, which focuses on artificial intelligence, deep learning, autonomous transportation and smart cities. The first investments are due to include Jerusalem-based Keepers, developer of non-invasive tools to help parents deal with their children’s addiction to social media and to cyber-bullying, and C2A, an automotive cyber-security firm that is developing protection for next-generation automobiles.
Our Crowd also hopes to raise $50M for a new fund, its 13th fund will concentrate on sports technology.
Tech Stocks’ Big Year
Israeli technology stocks had a very good 2017, with 9 out of the 10 biggest showing double-digit gains. Biggest gainer was SolarEdge, which develops photovoltaic solar technology; its shares rose by 200% in 2017. Other strong performers: TowerJazz, up 79%, Camteks (76%) Mellanox, (58%). Haaretz reported that Oppenheimer called 2017 the best year for Israeli stocks since the 1999 dot-com bubble, but noted a major difference: most of Israel’s dot-com boom companies were losing money, which was not true in 2017.
New $100 Million Fund
State of Mind Ventures (SOMV), headed by former Defense Ministry director-general Pinhas Buchris, is raising a second, $100M fund aimed at financing an early-stage Technology Company. The company, which is based in Herzliya, reportedly had $70M committed to the fund by mid-January. In addition to his Defense Ministry post, Buchris has been CEO of Oil Refineries Ltd. and while in the army, commander of the IDF Intelligence Corps 8200 technology unit.
Mergers & Acquisitions
Total value of mergers, acquisitions and initial public offerings of Israeli tech companies rose by 110% in 2017, as per a PwC report. According to the international accounting-consultancy firm, the average value of a deal was $106M, almost double 2016 $64M, and the combined value was $7.4B.
In a separate survey, IVC-ZAG reported that Israeli start-ups raised $5B last year, up slightly from 2016 $4.8B.
The Brazilian subsidiary of Israel’s Gazit Globe real estate company has signed an agreement to purchase 70% of the Internacional Shopping Mall in Sao Paulo for $271M. The remainder of the property is owned by two Brazilian entities.
BiomX, an Israeli drug-development company, acquired RondiX, another Israeli microbiome firm, for an undisclosed sum in December. BiomX, founded in 2015, is a graduate of the FutuRX incubator operated by Orbimed, Takeda and Johnson & Johnson in Nes Tziona, southeast of Tel Aviv. In a parallel transaction 8VC, a San Francisco-based angel investor, made an undisclosed equity investment in BiomX. BiomX develops customized phage technologies that combat chronic diseases including irritable bowel syndrome and some cancers.
Ormat Technologies, based in Yavne south of Tel Aviv and Reno, Nevada, has acquired, a renewable energy company focusing on harnessing geothermal energy to generate electricity. Purchase price for U.S. Geothermal, which operates projects in the western United States, was $110M.
UST Global, an information service company, has acquired Israeli company Bisec for just under $6M. The acquisition was made through a UST subsidiary, California-based Cyberproof.
Bisec, which was founded in 2016 and is based in Holon just outside Tel Aviv, develops automated information security technologies including Bibot, a virtual cyber expert that helps various teams collaborate on urgent security issues.
Accurate Medical Therapeutics, a developer of micro catheters used in intervention radiology, has been acquired by French medical technology company Sherbet for a reported 57M euros. Accurate, based in the high-tech area of northern Tel Aviv and founded in 2015, has developed micro catheters for embolization procedures of tumors and vascular aneurysms, which are currently undergoing registration and approval procedures in Europe and the U.S.
Amdocs, the business software and services giant with headquarters in St. Louis, Missouri and Ra’anana-Kfar Saba, Israel, has acquired Vubiquity, a developer of technology that monetizes content for the entertainment and media industries. Amdocs paid a reported $224M for Vubiquity, based in Reston, Virginia.
Amdocs reported an increase of 2.4% in revenues, to $978M, for its fiscal first quarter of 2018.
Springer Eyes Israel’s Zap
German publisher Axel Springer is discussing the purchase of Israel’s Zap Group, which specializes in price comparisons, from its current owners Apax Partners. Talks center on the NIS 400-500M range for Zap, which Apax bought less than two years ago for NIS 150M. Zap says that about 16 million surfers visit its 2 websites monthly, seeking information on 450,000 listed businesses.
Anheuser Busch InBev of Belgium, the world’s largest brewer, has purchased WeissBeerger, a Tel Aviv-based start-up, for a reported $80M. The Belgian company produces more than 400 beer brands worldwide, among them Stella Artois, Leffe, Becks and Budweiser. WeissBeerger currently has operations in Israel, North and South America, Europe and Asia.
SCD, a joint subsidiary of private defense contractor Elbit Systems and government-owned Rafael Advanced Defense Systems, has completed acquisition of U.S. company Quantum Imaging, based in Colorado Springs, Colorado. Purchase price was not disclosed. SCD, a developer and producer of electro-optic systems, is based in Karmiel in northern Israel. It has about 500 employees.
The FIMI private equity fund has acquired 53% of the capital of ImageSat, an Israel Aerospace Industries subsidiary, for a reported $40M. If the deal is approved by the Defense Ministry and the Antitrust Authority, ImageSat will use the proceeds to acquire EROS-C, a new high-resolution imaging satellite.
Science & High Technology
Autonomous Cadillac Test
General Motors is using Cadillac automobiles to test high-level autonomous driving systems on Israel’s highways. Dr. Shay Soffer, the Transport Ministry’s chief scientist, recently took part in one such test on the Ayalon Expressway, the main freeway running through the Tel Aviv metropolitan area. Development of the systems is thought to be centered on GM’s center in Herzliya, north of Tel Aviv.
GM isn’t the only automaker using Israeli roads. Daimler has said it is in the process of importing Mercedes Benz vehicles for the same purpose.
Tech Mahindra of New Delhi, a specialist in digital transformation and digital engineering, is investing $10M in a partnership with Tel Aviv’s ContextSpace solutions, which has developed cloud-based MYData Shield, which it says is the world’s first global software privacy ecosystem. Tech Mahindra notes that by 2020 over a third of all data, which will have grown 44-fold in the last decade, will live in or pass through the cloud.
IBM Expands Beersheba Lab
IBM has expanded its research center in Beersheba, making it the company’s largest such facility outside the U.S. The IBM Cyber Center of Excellence has been operating on the campus of Ben-Gurion University in the Negev city for four years, developing what the company calls cyber protection activities. The international software and computer giant also has a research center in Haifa.
Fast Track for Protalix Drug
Protalix Biotherapeutics, a drug developer based in Karmiel in northern Israel, says that the U.S. Food and Drug Administration (FDA) has given fast-track status to pergunigalsidase alfa, the treatment it is developing for life-threatening Fabry’s disease. The drug is currently being studied in 3 Phase III clinical trials around the world. Fabry’s is a genetic disease that results in significant reduction of life expectancy.
Aerospace & Defense
IAF May Opt For More F-15s
The Israel Air Force may opt for U.S.-made F-15 aircraft rather than F-35s in its next purchase, according to a report in Haaretz. Haaretz military reporter Amos Harel says aging of current aircraft necessitates a decision in the near future.
Harel cites IAF sources as citing several advantages of acquiring new F-15s, older models of which have been in service for two decades – a longer range and the ability to carry heavier bombs. In addition, the F-15, which is currently being upgraded by its manufacturer, Boeing, is considered less costly than the very expensive F-35.
Israel has contracted for the purchase of 50 F-35s, amounting to two squadrons. Nine of the advanced warplanes were already in IAF service at the start of 2018, and all 50 are due to be delivered within five years. Air Force officials tending to support acquiring F-15s, reportedly including Air Force commander Maj.-Gen. Amikam Norkin, suggest that acquisition of a third F-35 squadron could be delayed till the end of the next decade.
Female Squadron Commander
A graduate of the Israel Air Forces prestigious pilot’s course has been named the IAF’s first female squadron commander. Identified only as Major Toli for security reasons, the new commander, trained as a transport pilot, is 35, married and the mother of two. On taking over her new post, she assumes the rank of lieutenant colonel, the first female IAF pilot to achieve that rank.
IAI’s Weiss to Retire
Israel Aerospace Industries CEO Joseph Weiss says he intends to step down in a few months. Weiss, who has held the post for six years, is due to reach retirement age. Nissan Hadas, head of IAI’s Elta subsidiary, is also leaving his post.
In addition IAI has named Nimrod Shefer, a reserve major general and former Air Force squadron commander, as its new vice president in charge of strategy and R&D.
IAI seems due for some serious structural changes. According to a report in Haaretz, the government-owned IAI is seriously considering moving a substantial part of its production abroad, due to the demand by some large customers, and especially India, that IAI contracts but carried out locally in their own countries. Also in the works, under incoming CEO Harel Locker: cutbacks in administrative staff, consolidation of duplicated functions in more than one division and together, oversight of business units. IAI has not said that large-scale layoffs are in the works, but industry sources predict that hundreds of workers will be leaving the company.
IAI’s board of directors has already authorized the merger of its Bedek Aviation Group, civil aviation and engineering divisions into a single business unit.
Autonomous Vessel Exercise
The Seagull, an unmanned naval vessel made by Elbit Systems, took part in a recent joint exercise of Britain’s Royal Navy and the Israel Navy in Haifa Bay, according to reports in the Hebrew press. The unmanned craft scanned and mapped the shipping route for the British HMS Ocean helicopter carrier, identifying a mock mine and sending a warning to the British carrier. Seagull also took part in tactical maneuvers, sailing in a structure alongside the carrier and other ships.
According to a report on the Israel Defense website, Elbit is also supplying its CoMPASS optical systems for fitting on the Thai Royal Navy’s frigate HTMS Tachin.
M7 Aerospace, a subsidiary of Israel’s Elbit Systems of America, has been awarded a contract valued at $176M, if all options are exercised, to provide logistics and support services for the U.S. Army’s C-26 and UC-35 transport aircraft.
Magal Security Systems, based in Yehud near Ben-Gurion International Airport, has been awarded a contract to provide Toyota Tsusho Group with $13M worth of systems, including video and perimeter intrusion safeguards, to be installed in a major East African port. Magal, formerly part of Israel Aerospace Industries, became an independent company in 1984.
Central American Battery Contract
Epsilor, a manufacturer and developer of batteries and chargers for defense applications, has delivered its first order to a Central American country. Value of the deal was not disclosed. Epsilor, based in the city of Dimona in Israel’s Negev desert, has supplied its multi-use high energy density BB2590 batteries to the Israel Defense Forces and foreign militaries, including NATO.
F-16s to Croatia
Prime Minister Benjamin Netanyahu and Croatian Prime Minister Andrej Plenkovic have agreed in principle on the sale of used Israel Air Force F-16 jets to Croatia. An agreement to push the deal forward was signed by both leaders at the recent Davos conference. At the conference, Netanyahu and William McDermott, head of the SAP software firm, agreed to an investment of $300M in a 5-year digital health care project exclusively in Israel.
Elbit’s Aussie Contract
Elbit Systems has been awarded a $150M contract to provide battle management services to the Australian Ministry of Defense. The contract is through Elbit’s Australian subsidiary. The private Israeli defense contractor also signed a contract with the Philippines for the upgrade of 44 M113 armored personnel carriers. The contract, value of which was not disclosed, includes the installation of 12.7 mm machine guns mounted in RCWS remote-controlled weapon stations.
Italian Reciprocal Deal Completed
Israel Aerospace Industries has delivered a second early warning aircraft to Italy, effectively completing the deal for its $1B purchase of 30 M-346 training planes made by Leonardo for the Israel Air Force. In Israel, the Leonardo aircraft are called Lavie.
A research team at Ben-Gurion University in Beersheba’s Cyber Center says it has developed a method of detecting small unmanned aerial vehicles photographing a potential target by intercepting its video stream. According to a report in Globes, drones already pose an intelligence challenge because they can be used to photograph troop deployment, potential targets and strategic civilian installations.
Rafael Systems on Philippine Craft
The Philippine government has authorized purchase of three multi-purpose attack warships to be fitted with weapons stations and Spike missiles from Israel’s Rafael Advanced Defense Systems. The MaxDefense website says that lead contractors were likely to be Propmech Corp and Lung Teh Shipbuilding. In addition, the Philippine National Police are acquiring MZ-4P assault rifles from Emtan Karmiel, and Tavor submachine guns from Israel Weapon Industries.
New IDF Communications Tool
IDF Ground Forces will soon be getting a new command, control and information (C2I) system – the Shaked, due to be distributed to all field commanders from platoon level up. According to a report in Jane’s Defense, Shaked, in the form of a smartphone and smartwatch, will provide commanders with digital maps and real-time information on the location of friendly and enemy forces and data on possible routes and the local situation, and considerably speed up the process of decision-making, especially in combat situations.
Israel Aerospace Industries and Bank Hapoalim, one of Israel’s two largest financial institutions, have announced cooperation in cyber security, examining the effect of location and digital currencies like bitcoin can be used for new solutions in cyber protection of sensitive data between service providers and supply chains, taking into consideration human elements and other cyber-connected challenges in hyper-connectivity.
The Technion Institute of Technology and the Israel Space Agency plan to launch a formation of three nanosatellites into orbit late this year. The satellites, which will orbit in formation, are due to be lifted into space by Innovative Solutions in Space, a Dutch company which employs India’s Polar Satellite Launch Vehicle to launch satellites. The goal of the Adelis Samson Project is to prove that a group of satellites can orbit in formation for a full year, at an altitude of about 600 km above the Earth’s surface. It was developed by a team at the Haifa-based Technion’s Asher Space Institute headed by Prof. Pini Gurfil.
Progress in IMI Privatization?
Reports of progress between the Finance Ministry and Elbit Systems have produced cautious optimism about the long-delayed privatization of Israel Military Industries. According to media reports, the Finance Ministry is seeking NIS 1.7B for government-owned IMI. Elbit, Israel’s largest private defense contractor, is now the only bidder left in the privatization process, which has dragged on since it began 11 years ago. An agreement, if reached, must then get approval from the government’s Antitrust Authority.
Refueling Aging Satellites
Effective Space Solutions, based in Givatayim just outside Tel Aviv, has signed a $100M deal to prolong the life of two of an unnamed large communications satellite operator’s aging satellites. In 2020, Effective Space will send two 400 kg drone satellites, which will bond with the communications satellites as their current life cycle nears its end, refuel them and extend their life in correct orbit for an additional four or five years.
‘Revolutionary’ Solar-Powered UAV
APG Aero Systems, a start-up based in Netanya about 30 km north of Tel Aviv, recently completed a $3M private financing round to provide some of the funding for its new unmanned aerial vehicle, which it describes as the first of its kind in the world….applying the lessons learned from other UAVs on the market.”
APG says its new UAV, to be launched soon, has a structure that’s different from anything currently on the market. “There are things that limit aircraft: helicopters have difficulty staying airborne for a long time, fixed-wing aircraft need a runway. We will soon present a breakthrough development of a new UAV that will have the best features of each type. Other companies will be unable to imitate this UAV,” says APG CEO Yair Dubester.
According to Globes, APG, whose staff of 15 includes veterans of Israel Aerospace Industries‘ UAV Division, has focused on developments for the defense and homeland security markets. It has also developed a prototype of a UAV powered by solar energy capable of providing Internet and communications services at substantially lower cost than those currently supplied by satellite.
Infantry Rockets to IDF
The Israel Defense Forces recently contracted for thousands of shoulder-mounted Spike SR rockets and launchers from Rafael Advanced Defense Systems. The new rockets and launchers weigh 40% less than prior models, allowing the infantrymen who use them with greater flexibility on the battlefield. The launcher, based on lessons learned in 2014’s Operation Protective Edge in Gaza, is a joint development of the IDF’s Ground Forces Command and Rafael, as part of the defense contractor’s Land on the Horizon program for ground forces. It is also more precise than its predecessors.
IMI’s Super Bullet
Israel Military Industries has unveiled its new more accurate and deadlier 5.56-millimeter bullet capable of penetrating armor at a range of 800 meters. IMI small arms ammunition division managing director, Israel Shmilovitz, said that the new bullet was developed in response to operational requests seeking uniformity in the types of ammunition they use, without sacrificing performance – penetrating armor previously was possible with 7.62-mm bullets adapted for automatic weapon fire.
New Unmanned Samson Turret
Rafael Advanced Defense Systems unveiled a new version of its Samson unmanned turret fitted with an integrated Trophy active protection at the International Armored Vehicles conference held in London in late January. The turret incorporates two multi-purpose missiles, two independent sights, and recessed launchers for smoke grenades. Trophy has already been fitted on a number of IDF vehicles, including Merkava M3 and M4 main battle tanks and a range of armored vehicles, including Namer, Stryker and Piranha APCs.
Red Sky in Thailand
The Red Sky 2 Drone Defender system developed IMI Systems (formerly Israel Military Industries) was operationally deployed last October for the funeral of former King Bhumibol Adulyadej of Thailand, attended by dignitaries from 43 nations, the Thai royal family and about 250,000 Thai citizens. During the ceremony, the system, purchased only a week earlier, detected and neutralized two alerts, according to an IMI statement. In November, IMI provided anti-drone protection for an additional international event in Pattaya, Thailand.
Red Sky protection includes detection of hostile threats, automatic tracking, disrupting abilities, and locking and neutralizing threats. It is based on advanced radar with a 3-5 km range, an advanced thermal camera and a multi-directional capability to lock on targets.
Sky Rider Upgrades
The IDF Armored Corps Sky Riders drone unit has experienced a significant upgrade increasing the time in flight and range, camera sophistication and target-marking and imaging capabilities of its unmanned aerial vehicles, according to a report on the Israel Defense Forces Hebrew website. According to published data, the Sky Riders unit is equipped with Skylark 1 UAVs developed by Elbit Systems.
Israel is a small country but a cyber superpower, says David Petraeus, former head of the CIA and commander of U.S forces in Afghanistan. Speaking at the late January CyberTech conference in Tel Aviv, Petraeus, speaking in a forum alongside retired IDF general Nadav Zafrir, who once commanded the Intelligence Corps fabled 8200 technology unit, said that U.S.-Israeli collaboration had reached “new heights time and time again” over the years, and that the continuing partnership enables both sides “to cope effectively with increasing threats” to various installations, including key parts of the civilian infrastructure. Another speaker at the conference, National Security Agency head Nadav Argaman, said that over the past year his agency had thwarted numerous cyber attacks on Israeli targets from various places in the world. He did not specify.
Drone Threat Task Force
The Israel Air Force has been designated to lead a new special task force addressing drone-related threats, together with the Israel Police and Shin Bet, the Israel Security Agency. The task force was established in the wake of a highly critical report by State Comptroller Joseph Shapira, describing how various security agencies have avoided responsibility for the growing problem, claiming it’s some other agency’s responsibility. The entity will be headed by an IDF officer with the rank of colonel.
New Missile Force
Defense Minister Avigdor Lieberman has ordered establishment of a new missile force for ground-to-ground missiles with ranges of up to 300 km. According to a report in Yediot Aharonot daily, the new unit will be equipped with EXTRA (extended-range artillery) missiles with a 150-km range already being produced by Israel Military Industries for foreign armies. About $500M has been allocated to establish and arm the new unit, according to the newspaper report.