News Analysis – February 2019

General News Summary

Elections Ahead

Prime Minister Benjamin Netanyahu faces two very different challenges ahead of Israel’s parliamentary elections due to take place on April 9, a new rival for the office he has held for a decade in former Israel Defense Forces chief of staff Benny Gantz and the possibility of indictment in one or more of several corruption cases.

Elections were called after the Knesset, Israel’s parliament, voted to dissolve itself in late December. Failure to agree on military service of ultra-Orthodox Jews was the breaking point, but a state of crisis had existed for more than a month, since the resignation of defense minister Avigdor Lieberman over differences with Netanyahu on dealing with ongoing tension on the Gaza Strip border.

With elections themselves less than two months away, political parties were still assembling lists of candidates (seats in the Knesset are allotted according to the percentage of the total vote each party receives, provided the party passes the 3.25% electoral threshold, below which no seats are allotted). Though the picture was still hazy, polls taken in mid-February showed Netanyahu and a possible joint ticket led by Gantz and/or Yair Lapid, a former finance minister and leader of the Yesh Atid centrist party, running about even, each with slightly over a quarter of the potential vote.

Syria – Determination and Delicacy

Israel remains determined to prevent a build-up of Iranian armaments in Syria, though it’s not clear if it’s been able to prevent Iran from realizing its ambition of establishing a permanent military presence in its neighbor to the northeast. According to mid-February reports, repeated Israeli airstrikes against Iranian arms depots and facilities apparently designed to produce advanced weapons have forced Iran to move key installations from the Damascus area to a more secure site at T4, a Syrian airbase located between Palmyra and Homs in the northern part of the country.

In recent weeks, both Prime Minister Benjamin Netanyahu and Gadi Eizenkot, the just-retired IDF chief of staff, have said that Israeli strikes have blunted the Iranian ambition to station a permanent 100,000-strong military contingent in Syria.

In attempting to deal with the threat posed by an Iranian presence in Syria, the presence of Russian forces and Russian interests must be factored. On the one hand, it’s unreasonable to expect the Russians to push off the Iranians, with whom they share the common interest of shoring up Syrian President Bashar al-Assad’s regime. On the other hand, the Russian reaction to repeated Israeli raids on Syrian targets has been generally mild.

There have been exceptions: The Russians took Israel to task for the inadvertent downing of an intelligence-gathering plane and the death of 15 Russian crewmen in September, by Syrian missiles during an Israeli air raid. In the aftermath, Russia provided S-300 air defense systems to Syria, which it previously had refrained from doing at Israel’s request. Though Russian and Israeli militaries maintain contact to avoid future inadvertent incidents, a Russian official recently said that the incident had not been “left behind,” and that the airstrikes were “unlawful.”

Iranian Foreign Minister Mohammad Javad Zarif took things a step farther, saying the risk of war with Israel was great if Israel continues its bombing raids on Iranian targets in Syria. News agencies quotes Zarif, speaking to an international security conference in Munich, as saying that Israel was “looking for war,” and called upon the European powers to hold Israel responsible for its actions.

“Allies” Against Iran

For several years, Prime Minister Benjamin Netanyahu has pursued the goal of improving ties with so-called moderate Arab states based on the shared threat from Iran, arguing that such a de facto alliance, and not a resolution of Israel’s conflict with the Palestinians, is the key to regional relations.

In mid-February, the Israeli leader offered the world a glimpse in the form of a video from a closed session of a U.S.-sponsored Middle East conference in Warsaw, Poland. The video, which appeared briefly on Netanyahu’s official YouTube page before being withdrawn, four Arab foreign ministers can be heard saying that confrontation with Iran is more “toxic” than the Arab-Israeli conflict. One of them, Bahraini Foreign Minister Sheikh Khalid bin Ahmed bin Mohammed al-Khalifa, can be heard saying that were it not for the “guns and foot soldiers of the Islamic Republic, I think we would have been much closer today in solving this issue with Israel.”

Netanyahu said that a taboo had been broken when no less than 10 high-ranking Arab officials shared the stage with him at a conference session. “Here you have Arab foreign ministers, who say that Israelis have the right to self-defense, and don’t say it in secret but on a stage with 60 other countries present,” he said.

Secret meetings with Arab leaders have been going on for years, Netanyahu told reporters during a break in the Warsaw discussions, saying that formal ties with several Arab states were already “half-open.” In some cases, more than that: Netanyahu, who visited Oman in October, shook hands in public with the Omani foreign minister in Warsaw, and exchanged pleasantries with Yemen’s foreign minister when they were seated next to each other at a festive conference dinner.

Talks Reopening

Israel reportedly has agreed to reopen economic agreements it signed with the Palestinian Authority in 1994. According to a report in Globes business daily, Palestinian President Mahmoud Abbas contends that the Paris agreements, intended to serve as a temporary measure in the wake of the previous year’s Oslo Agreements, put the Palestinians at a disadvantage. In addition, Globes reported that some provisions for gradual removal of various restrictions, including export of produce from the Palestinian territories, were never implemented. In February 2018, the Palestinians authorized drafting an operative plan for severing the PA from Israel in all areas, including economic agreements and possibly discontinuing use of the Israeli shekel and issuing an independent Palestinian currency.

More Aid in Spending Bill

The spending bill ending the U.S. budget crisis signed by President Trump on February 15 allocates an additional $200M in defense assistance to Israel. According to a report in the Times of Israel, the provision goes beyond the $3.8B in funds already designated for security assistance to Israel under the 2016 memorandum of understanding between the Obama White House and the Netanyahu government. The spending bill also includes a two-year extension of the Department of Defense authority to house emergency weapons in Israel and provide Israel with loan guarantees for five years.

Moshe Arens 1925-2019

Moshe (Mischa) Arens, who served as defense and foreign minister in various Likud governments from 1983 to 2003, died in early January. Born in Lithuania, Arens, an engineer by profession, was first elected to the Knesset in 1973, and was Israel’s ambassador to Washington in 1982-83.

Kochavi Takes Over

Lt. Gen. Aviv Kochavi was sworn in as the 22nd chief of staff of the Israel Defense Forces on January 15, succeeding Lt. Gen. Gadi Eizenkot. Kochavi, 55, previously served as deputy chief of staff, head of the Northern Command and the Gaza Division, and director of Military Intelligence.

Chinese Role Questioned

During an early-January visit to Israel, U.S. National Security Adviser John Bolton questioned the penetration of Chinese technology in Israel in conversations with Prime Minister Benjamin Netanyahu. According to a Bloomberg report, Bolton focused on a Chinese firm’s license to operate Haifa Port and telecommunications investments.

Shanghai International Port Group won a 25-year license to operate a new Haifa port facility four years ago. Israeli officials insist that the contract with the Chinese firm includes an appendix requiring SIPG to respect Israel’s security needs. Despite the denials, there have been reports that U.S. Sixth Fleet warships will stop visiting Haifa once work on the new port facility is due to be completed next year.

The Economy

Growth Tops OECD

Israel’s GDP for 2018 increased by 3.2%, compared to a 3.5% growth in 2017 and 4% in 2016, according to initial and incomplete Central Bureau of Statistics data. Growth of 3.2% puts Israel at the top of OECD countries. Per capita GDP, at slightly over $41,000, was up 1.2%.

Tourism Record

More than 4.1 million tourists visited Israel in 2018, according to Ministry of Tourism figures. The record figure represented a 14% increase over 2017, the previous record year, and a substantial 42% over the figure for 2016. The Tourism Ministry estimates that tourism brought in $5.8B in revenues last year.

Record Forex Reserves

Israel’s foreign exchange reserves at the end of January was $118.151B, a new record and up $2.872B from the end of December 2018. According to the Bank of Israel, the reserves are equal to 32.1% of Gross Domestic Product.

New Flights

Israel’s Arkia Airlines plans to begin flights to two Indian destinations, Goa and Cochin in the state of Kerala beginning September. Arkia will be the third airline with direct flights to Indian destinations: El Al operates direct flights to Mumbai and Air India flies from Tel Aviv to Delhi on a shorter route flying above Saudi Arabia.

In separate developments, El Al will have night flights from Tel Aviv to Orlando’s MCO Airport in July, and Britain’s Virgin Atlantic will launch service between Ben Gurion International Airport and London’s Heathrow in September.

Energean to Build Gas Facility

Energean, the Greek energy company, will construct onshore and near-shore facilities for gas from Israel’s Tanin and Karish offshore fields. The contract is valued at $98M.

In a separate development, Energean signed a $900M deal to provide 5.5 billion cubic meters of gas from the Tanin and Karish fields to IPM Beer Tuvia, whose private power plant is due to become operational in 2020.

Sodastream Gaza Plant

Sodastream, the Israeli maker of do-it-yourself soft drink technology, plans to open a plant in Gaza. According to a report in Globes, Sodastream CEO Daniel Birnbaum and Ramon Laguarta, who purchased Sodastream for $3.2B last year, told an Israeli business conference that preparations were under way for the Gaza plant. Several years ago, Sodastream closed its original plant in the West Bank and moved its operations into Israel proper in response to international pressure for operating in occupied territory.

Japan Trade Talks

Industry and Economy Minister Eli Cohen discussed a free trade agreement with visiting Japanese counterpart, Trade Minister Hiroshege Seko, in mid-January. Mutual trade between the two countries amounted to about $3.5B last year, up 20% from the 2017 figure.

Meanwhile, El Al charter subsidiary Sun d’Or will launch the first direct flights between Tokyo’s Narita Airport and Tel Aviv’s Ben Gurion Airport in September.

Potash Pact

Israel Chemicals has signed a 5-year agreement to provide potash to Indian Potash Ltd. (IPL), the subcontinent’s largest potash importer. ICL will provide up to 650,000 tons of potash each year. Price was undisclosed.

Cannabis Exports

Exports of cannabis-based products are expected to begin within 12 months, under terms of a late-January cabinet decision.

New Chief Economist

Shira Greenberg, 39, has been named chief economist of the Finance Ministry. She replaces Yoel Naveh, who retired last year. The industry, based on a combination of Israeli agricultural and medical expertise, is expected to produce revenues for Israeli companies in excess of $250M annually.

Subsidy for Women’s Start-Ups

The government’s Innovation Authority says it is launching a subsidy program for start-ups founded by women. To qualify for the program, which includes grants of about $700,000 in the first year of operation, 33% of the company’s ownership and technology leadership must be female.

Reciprocal Procurement

Reciprocal procurement by foreign companies in Israel totaled $13.9B over the past five years, 2.3 times the amount required under reciprocal procurement agreements, according to Ministry of Economy and Industry figures. In all, 190 foreign companies made reciprocal procurement orders from 1,840 Israeli industrial companies during 2013-2018.

Ashdod Port Privatization

Privatization of the Ashdod Port will not take place for at least five years, Transport Minister Yisrael Katz said in late December. Katz made the decision after meeting with leaders of the government-owned port’s workers committee, who under terms of their contract, must agree to the sale of the facility.

Finance & Investment

Start-Ups Closed

About 3,307 Israeli start-up companies closed in the five-year period from 2012 to 2017, according to a report by the IVC research institute. Total fundraising by the companies was just short of $4B.

Exits Down by One-Third

Israeli companies made 61 first-time exits for a total of $4.9B in 2018, compared with 70 exits totaling $7.4B in 2017, a 33% drop in the volume of deals, PWC said in its annual report. The average deal in 2018 was $81M, compared with $106M in 2017. Figures do not include several large deals: Orbotech Ltd. (Nasdaq: ORBK) ($3B), Imperva ($2.1B), Mazor Robotics (over $1.5B) and NDS ($1B), because they were not the companies’ first exits. If those exits are included, the figure rises sharply to $12.6B.

Tech Fundraising

Israeli technology companies raised a total of $6.47B in 623 funding deals in 2018, according to a report by IVC and the Zysman, Aharoni, Gayer and Sullivan & Worcester LLP law firm. It was the highest sum raised in the past six years.

Bringg Gets Siemens Cash

Siemens, the German international electronics giant, has invested $25M in Bringg, a Tel Aviv-based developer of delivery logistics platforms. Bringg already operates in over 50 countries; its customers include Walmart, Panera Bread and Arcos Dorados (McDonalds largest global franchisee).

Porzingis, Cruijff Invest in Force7

Current NBA star Kristaps Porzingis and former football luminary Jordi Cruijff are among the investors in a $2.5M financing round of Force7, a developer of injury-prevention technology with bases in Tel Aviv and Palo Alto, California. Zone7 technology uses a variety of sources including wearables and video to develop a customized pattern recognition pattern to track medical conditions and performance. Force7 says that its software is used by football clubs in England, Israel and Spain.

Amazon Leads Wiliot Round

Amazon and Samsung were lead investors in a $30M financing round of Wiliot, an Israeli start-up based in Caesarea. Wiliot developed a battery-free small-size Bluetooth sensor tag that can be attached to ordinary objects and communicate data to manufacturers, marketers and retailers.

 

Aerospace & Defense

 

F-35 Wing Skins

Israel Aerospace Industries (IAI) opened a new production line for the manufacture of wing skins for F-35 aircraft. IAI was chosen to make the skins by lead contractor Lockheed Martin in a 20-year contract expected to produce hundreds of millions of dollars in revenues for the Israeli firm. Production involves Automatic Fiber Placement of layers of composite materials.

French Connection for IAI

Conflicting reports have surfaced concerning an alleged effort by government-owned IAI to purchase European aircraft maintenance firm EAS. France’s Le Figaro newspaper reported in mid-December that EAS controlling shareholder Bruno Lechevin claimed that IAI was one of six potential buyers for the firm, which is based in southern France.

Barak-8 India Test

A Barak-8 long-range surface-to-air missile was successfully tested by India in late January. The missile, jointly developed by India’s Defense Research and Development Organization with Israel Aerospace Industries, Elta Systems and Rafael Advanced Defense Technologies, was fired from the Indian Navy destroyer INS Chennai, hitting an aerial target flying at low altitude. The Indian Navy intends to make the Barak-8 LR-SAM the standard area defense weapon on warships.

A few weeks later, IAI said it had signed a $93M contract with the Indian Navy and Cochin Shipyards Ltd. to provide complimentary medium-range surface-to-air missile systems.

New India Phalcon Deal?

India is said to be on the verge of giving final approval to $800M purchase of two Phalcon A-503I from Israel, according to a report on the Air Recognition industry magazine website. The deal for the airborne warning and control (AWACS) aircraft was initially approved by the government in New Delhi in 2016 but delayed when the Indian Finance Ministry objected to the “high costs.” Three Israeli-made Phalcon systems purchased more than a decade ago are already in service with the Indian Air Force.

According to the same Air Recognition report, India, known to be considering purchase of Heron and Harop unmanned aerial vehicles from IAI, is seeking to renew a contract for Spike anti-tank missiles from Rafael, and is considering competing offers by Elbit Systems and Nexter of France for 400 towed 155mm artillery gun systems.

U.S. Army Buying Iron Dome

The U.S. Army decided to purchase an undisclosed number of Israeli-made Iron Dome missile-defense systems, according to a report in Globes. The system, developed by Rafael, was chosen after extensive testing over Norwegian and American-made systems; its mission is defense of U.S. forces against immediate threats. According to the Globes report, the decision, which came too late to be included in the 2019 U.S. defense budget, will require diversion of funds from previously approved projects.

Arrow 3 Test Success

Israel successfully tested its Arrow 3 long-range missile defense system in mid-January. The test, over the Mediterranean off the Israeli coast, followed a series of unsuccessful tests. It was conducted by the Defense Ministry’s Missile Defense Organization and the U.S. Missile Defense Agency, with the Israeli Air Force and Arrow 3 manufacturer IAI. Arrow 3, which intercepts missiles outside the atmosphere, is part of Israel’s multi-layered missile defense system which also includes Iron Dome and David’s Sling.

Space Cooperation

IAI and German satellite developer OBH Systems have agreed to develop a commercial lunar access service. Under terms of the agreement, signed in January in Tel Aviv, IAI will build the lander, accommodate payloads and integrate the launcher while OHB manages service commercialization and mission definition with prospective users. It’s part of In-Situ Resource Utilization, a European Space Agency initiative to send landers to the Moon for testing technologies to extract oxygen, water and other raw materials from lunar soil, technologies essential to long-term human colonization in space.

Destination Moon

Beresheet, Israel’s first spacecraft, took the first small step on its projected journey to the Moon in mid-January when it was shipped by cargo plane to Orlando, Florida, prior to a launch from the SpaceX platform at Cape Canaveral, Florida. One of the five finalists in the Google LunarX prize competition, which ended last year with no winner, Beresheet was developed by the SpaceIL nonprofit and IAI. The mission, due to be launched in the coming months, will be the first private unmanned spacecraft to land on the Moon.

Gilat Chosen

Israel’s Gilat Satellite Networks has been awarded a multi-year contract to provide equipment and services for broadband connectivity over the Indian Space Research Organization’s GSAT-11 satellite. Gilat was chosen to supply ground services and operate four gateways by Larsen & Toubro, an Indian multinational engaged in technology, engineering, construction, manufacturing and financial services. GSAT-11, launched in January, will provide broadband coverage over India’s mainland and islands, boosting connectivity to rural India.

Aeronautics License Restored

The Defense Ministry in early February restored the export license of Aeronautics, the Israeli developer of unmanned aerial vehicles. Last August, the ministry halted Aeronautics license to export $30M worth of loiter munitions UAV systems to an unnamed, leading to a probe by the Israeli Police and the Israel Securities Authority for suspected violations of Israeli defense export controls law. Temporary suspension of the company’s CEO and two other executives from the Israeli Defense Export Registrar is still in place.

In early February, Rafael and Israeli businessman Avihai Stolero appeared to be the high bidders to acquire Aeronautics, after IAI said it was no longer interested in acquiring the UAV manufacturer. Rafael and Stolero’s latest bid nearly doubled their previous bid for Aeronautics at a valuation of NIS 850M ($231M). In August, Aeronautics rejected a NIS 430M ($116.6M) acquisition offer from Rafael and Stolero.

Meanwhile Embraer, the Brazilian aerospace contractor, has acquired a 10% stake in Aeronautics. Most of the shares were acquired from Phoenix, an Israeli finance and insurance group; the remainder of the 10% were bought on the Tel Aviv Stock Exchange. Announcement of the purchase took place during Prime Minister Benjamin Netanyahu’s late-December visit to Brazil.

According to a report in Yediot Aharonot newspaper, expatriate Israeli businessman Aaron Gover Frenkel has acquired a total of 13% of Aeronautics equity. Frenkel, who lives in Monaco, is the owner of Lloyd’s Group of Companies, which invests and owns assets in real estate, civil aviation and aerospace, energy, and technology.

Aeronautics, which became a public company in mid-2017, develops and manufactures UAVs, observation balloons, bomb fuses and advanced navigation systems.

New Exec Jet Planned

IAI and Gulfstream will each invest $80M in development of a new executive jet, and advanced model of the G280 currently produced by IAI and marketed by the American company. IAI’s board approved the project in late December.

Elbit Gets Ammo Contract

Elbit Systems has been awarded a NIS 1.25B (about $333M) five-year contract to provide ammunition for the Israel Defense Forces. The contract was part of the agreement under which Elbit, Israel’s largest private defense contractor, acquired IMI, the former Israel Military Industries, in a NIS 1.9B privatization sale completed late last year.

…and Laser Deal

Elbit Systems of America LLC, an Elbit subsidiary with headquarters in Fort Worth, Texas, has been awarded a contract to provide the Two-Color Laser System (TCLS) for the Multi-Spectral Targeting System from U.S. defense contractor Raytheon. TCLS is a component of electro-optical surveillance system for multiple military airborne platforms, including the next-generation targeting systems aboard unmanned aerial vehicles.

On Target

The Defense Ministry has acquired 2,000 advanced gunsights for use by infantry units. The SMASH sight, which requires only minimal modifications to be attached to a weapon, enables the rifleman to designate any target (such as a person, vehicle or object, like a vehicle’s wheel) and hit it with high probability, from the weapon’s maximum effective range. It was developed by Smart Shooter Ltd., based in Kibbutz Yagur, not far from Haifa.

Russia-Egypt Tank Contacts

UralVagonZavod, the Russian manufacturer of battle tanks, is seeking to establish an assembly line for 400 T-90S/SK tanks in Egypt, according to a report on the cairoscene.com website. Production is expected to begin late this year for the line, which would turn out about 50 tanks per year.

Elbit Sensors for Gas Field

Elbit Systems has been awarded a $15M contract to provide a comprehensive security solution for the offshore Karish and Tanin natural gas fields. Under terms of the contract, Elbit will provide Energean Israel, the Greek operator of the field, with an array of sensors, radar, sonar and a command and control system capable of identifying threats on the surface and underwater.

Grenade Device

The U.S. military reportedly was due to begin acquisition early this year of the Trigger Pouch, an innovated grenade holster that carries grenades in a safe and secure manner. According to a report in Israel Today online newspaper, the pouch, made by ACS Industries of Tel Aviv, enables quick one-handed release during combat. Israel’s Yamam anti-terror unit is already equipped with the Trigger Pouch, and elite combat and security units in France, Germany and Japan have tested it.

Armor Defense

U.S. armed forces are protecting their armored vehicles with Israeli technology. The U.S. Army has authorized installation of the Iron Fist on several of its Bradley fighting vehicles after positive results in preliminary testing of the Israeli-made active protection system. Iron Fist, developed by IMI Systems, uses electro-optical soft-kill jammers and a hard-kill interceptor to protect armored vehicles from rocket-propelled grenades and anti-tank missiles. In addition, the U.S. is spending $200M for the purchase of another Israeli-developed active protection system, Rafael’s Trophy, for installation in 274 Abrams battle tanks. Trophy has been installed on Merkava Mark IV tanks of the Israel Defense Forces 401st and 7th Armored Brigades.

Joint Exercise

300 American soldiers and 400 IDF troops took part in a joint exercise in Israel in early February. The periodic exercise, called Juniper Falcon, rehearses scenarios in which American forces are deployed in Israel to aid missile defense operations, including high-trajectory fire aimed at Israel. IDF logistical and medical units, as well as the Air Force, participated in the cooperative exercise.

In addition to Juniper Falcon, Israel and the U.S. also hold Juniper Cobra, a five-day combined air force drill every two years. Last year’s drill simulated a massive ballistic missile attack and culminated with live-fire tests of two air defense systems over central Israel.

IAI UAVs Aid Brazil Crops

BirdEye 650D unmanned aerial vehicles will collect data and provide advanced analytics for large-scale agricultural applications in Brazil, under terms of an agreement between IAI and Brazil’s Santos Lab Comercio E Industria Aerospacial LTDA. Santos Lab will operate the UAVs, including its hyper-spectral wide coverage imager developed by IAI for the precision agriculture market. The agreement is expected to generate hundreds of millions of dollars in the coming decade.

Projected missions for the BirdEye 650D include monitoring crops such as soy and sugar cane and commercial forestry, accurate analysis of the crops and soil condition, and delivery to customers through a dedicated cloud solution. The service is expected to become operational at the end of 2019.

Drone Dome at Gatwick

The British Army deployed Drone Dome, the defensive system against small unmanned aerial vehicles developed by Rafael, to end the drone threat that shut down London’s Gatwick Airport in late December. According to various reports, UK authorities resorted to Drone Dome after attempting to track the small UAV flying in Gatwick’s airspace with simpler, off-the-shelf systems. Six Drone Dome systems were purchased last year by the British Army. Drone Dome uses four radars to give full 360° coverage and is capable of spotting transport aircraft at a range of 31 miles. For smaller UAVs like the one used at Gatwick, detection range is up to 6.2 miles. When paired with radio frequency jammers, the system reportedly is capable of a “soft kill” of intercepted UAVs.

Heron Lease Extended

Germany has extended the lease of Heron 1 unmanned aerial vehicles until mid-2020, according to Airbus, the primary contractor in the contract for the IAI-made UAVs. Heron 1, a medium altitude long endurance (MALE) unmanned aerial system (UAS), can stay airborne for very long periods and can be operated from unpaved runways under harsh environmental conditions. The German Air Force has been using Herons, which have a range of 800 km, in Afghanistan since 2010 and in Mali since 2016.

Rafael Plan

Rafael has unveiled its proposal for the Next Generation Combat Vehicle, a network of manned and unmanned armored vehicles, with one acting as a mothership to coordinate the use of weapon systems. According to a report in Defense News, such a suite of armored vehicles would allow an operator to manage unmanned aerial vehicles together with a variety of weapons systems. Inside the company’s prototype, several screens display a 360-degree picture of what is happening outside, and a map shows the locations of friendly forces. The mothership vehicle could “slave” other vehicles with better views of a target.

Rafael said the technology already exists to transform any armored vehicle from armored personnel carriers to tanks, into this “ultra-modern combat system” that simultaneously acquires and neutralizes multiple targets.

Elta’s Finnish Deal

Elta Systems, a subsidiary of IAI, has won a tender to supply multi-task radar systems to the Finnish Army. Value of the contract was not disclosed, but press reports estimate it at tens of millions of dollars. The systems, from the MMR series, are smaller than similar technology used in Israel’s Iron Dome anti-missile system but is said to be capable of detecting launching of artillery shells and rocket fire, and issuing warnings of imminent attacks.

Cyber Power

Israel plays a significant and substantial role in worldwide cyber development, according to a survey published in January by Luzatto & Luzatto Tel Aviv law office. Among indications in the survey: Israel accounted for 10% of world cyber industries, second only to the U.S.; Israel now has 450 operating cyber companies, 60 of which were founded last year; a record $2.8B from 12 exits of cyber-related companies, compared to $1.35B in 14 exits in 2017.

Security Accelerator

Leading Israeli and international defense firms have launched iHLS Accelerator, the world’s first start-up accelerator with major emphasis in defense and homeland security production. Among the fields of interest are HLS (HTTP live streaming), big data, IoT, unmanned systems, robotics, cyber, border security and defense, strategic installations security, deep learning, nanotechnology, electro-optics, civilian security, aerodynamics, video analytics, image processing, face recognition, aerial defense, safe/smart city, AR/VA, training and simulation. Sponsors include IAI, Elbit Systems, Incubit, Raytheon, Verint, PWC, APM Law Firm and Cyient.

Automatic Airdrop

The Israel Air Force successfully concluded a series of tests of an automatic system enabling aircropped cargo to direct itself towards forces on the ground. According to an IAF announcement, the series of tests included 9-hour flights and high-altitude drops.

Raytheon Missiles to IAF

Raytheon, the U.S. defense contractor, won a contract to supply $9.2M worth of AIM-9X Sidewinder air-to-air missiles to the Israel Air Force. According to a U.S. Department of Defense announcement, the deal also includes training missiles.

Thai Delivery

Elbit Systems has provided the Thai Army with another batch of ATMOS artillery systems and mortars. Under terms of the agreement, allowed parts of the hardware will be manufactured in Thailand. According to a Thai report, as many as 48 of the 52-caliber guns may eventually be sold. In addition to the artillery systems, Elbit supplied the Thai Army with 120mm Autonomous Truck Mounted Mortars (ATMMs), mounted on TATA LPTA 715 4×4 utility trucks.

Smart Holster

Armslock, based in Ramat Gan has developed a “smart holster” designed to minimize accidents and incidents caused by unauthorized use of handguns. The system uses either biometric identification and/or a RF bracelet which allows quick and easy removal by authorized users and prevents unauthorized use.

Mergers & Acquisitions

Tech Exits Halved

Exits of Israeli technology firms amounted to $12.6B in 2018, down from $23.7B in 2017, according to a report by IVC. The 46.7% drop in the value of initial public offerings or merger and acquisition deals was attributed to a reluctance of Israeli entrepreneurs to sell their companies in the hope of increasing valuations by growing their firms.

Intel Bids $5.5B for Mellanox

International chipmaking giant Intel has bid $5.5B for Mellanox Technologies, a developer of high-speed chips for the transmission of big data. Customers of Mellanox, based in Yokne’am near Haifa, include server farms with mega computers such as universities and other organizations including NASA.

According to a report in Globes, Eyal Waldman, Mellanox’s founder and CEO, is seeking $6.7B, a 25% premium on the company’s mid-February market cap.

NSO Sold

Francisco Partners has sold NSO, the Israeli intelligence systems developer, to a group, including its original founders and senior executives, at a company valuation of about $1B. Francisco acquired NSO for $130M in 2014. NSO, which develops technology that helps government intelligence and law enforcement agencies prevent and investigate terrorism and crime, is supervised by the Defense Ministry.

Amazon-Cloud Endure

Internet e-commerce giant Amazon is purchasing Cloud Endure, a Ramat Gan-based specialist in data-saving technology for use if cloud hosts collapse. Purchase price: $250M.

Symantec-Luminate

Symantec, the U.S. cybersecurity specialist with headquarters in Mountain View, California, has purchased Israeli SaaS security platform developer Luminate Security. Purchase price for Luminate, which has offices in Tel Aviv and Palo Alto, California, was not announced, but industry sources estimate it at about $200M.

Radware-ShieldSquare

Radware, the Tel Aviv-headquartered developer of cloud-based network security services, has acquired ShieldSquare, an Indian developer of anti-bot technology. Purchase price was not announced but is estimated to be $15-$20M. With offices in Bangalore and Chennai, ShieldSquare has developed technology that helps distinguish between human and non-human traffic on websites and mobile applications.

Xenon-Xplenty

Xenon Ventures, a B2B technology accelerator based in Beaverton, Oregon, has acquired Xplenty of Tel Aviv. Purchase price was not announced, but press reports put it at under $10M. Xplenty technology helps companies speed the integration, transformation and organization of data faster, bypassing setbacks and problems of ETL tools.

SolarEdge-SMRE

SolarEdge, the Herzliya-based smart energy developer, has acquired SMRE, an Italian specialist in power for electric vehicles. Price: $77M for 51% of SMRE. SMRE, based in Mont Castelli, develops mobility solutions for hybrid and electric-powered motorcycles, trucks and commercial vehicles.

Samsung-Corephotonics

Samsung, the Korean electronics technology giant, purchased Corephotonics, a developer of smartphone camera technology based in Tel Aviv. Reported purchase price: $155M. One of the founders of Corephotonics, which has developed higher-quality dual-lens capabilities for mobile phones, is Tel Aviv University electrical engineering Prof. David Mendelovic.

Keystone-Paltop Merge

Keystone Dental, a U.S. company owned by Israel’s Accelmed Growth Partners, has entered into a definitive agreement to merge with Israel’s Paltop Advanced Dental Solutions. Caesarea-based Paltop specializes in precision manufacturing and state-of-the-art digital dental implant solutions.

Bridgepoint-Miya

Bridgepoint, an international private equity specialist, has purchased the Miya water technology investment firm from Israel’s Arison Group for a reported $260M. The sale is the latest in Israel-American billionaire Shari Arison’s divestment of Israeli assets, following the NIS 160M sale of the heiress’s Salt of the Earth real estate firm to the Fortissimo fund in January and sales last year of her stakes in the Shikun u’Binui construction firm and Bank Hapoalim.

Lohia Group-Light&Strong

India’s Lohia Group has purchased Light & Strong, an Israeli developer of composite materials, for an undisclosed price. Based in the Kannot Industrial Park south of Tel Aviv, Light & Strong specializes in aerospace and military carbon fiber and glass fiber composite components for use in a variety of platforms, including unmanned aerial vehicles. According to Globes, Light & Strong’s clients include Israel’s Ministry of Defense.

Delek Sells IDE Stake

Businessman Yitzhak Tshuva’s Delek Group has sold 30% stake in desalination specialist IDE Technologies to Alpha Partners for NIS 530M, in a deal that represents a company valuation of NIS 2B. Alpha Partners which manages IDE, previously owned 50% of the company, in which Delek retains 20%.

Chroma Buys Camtek Stake

Chroma, a Taiwanese developer of high-precision measurement equipment, has agreed to purchase 20.5% of Israel’s Camtech for just over $75M. Camtek, headquartered in Migdal Ha’emek near Haifa, specializes in cutting-edge inspection technology.

Check Point-ForceNock

Check Point Software Technologies, Israel’s world leader in network firewall security, has acquired ForceNock Security, a small Tel Aviv-based firm.  Purchase price was not announced. ForceNock uses machine learning algorithms to develop web application security systems.

Tal-Ready4

Tal Education Group, an international education service group headquartered in Beijing, has acquired Ready4, an Israeli-American developer of AI-powered test preparation and academic application technology. Purchase price for Ready4, which has offices in Tel Aviv and Boston and was formerly called LTG Exam Prep Platform, was not disclosed. Tal official David Zhao said under its former name, Ready4 was Tal’s first investment outside China in 2014.

Kofax-Top Image

Top Image, a developer of document-based business process automation software based in Ramat Gan just east of Tel Aviv, has been acquired by Kofax Inc., of Irvine, California, a subsidiary of the Thomas Bravo investment firm. Purchase price was about $16M.

Salesforce Eyes Clicksoftware

Salesforce, the cloud software specialist headquartered in San Francisco, is in advanced talks to purchase Israel’s Clicksoftware. According to Globes, the projected purchase price of Clicksoftware, a developer of cloud-based field service software with offices in Petah Tikva east of Tel Aviv, is in the $1.5B range. Such a sale would represent a substantial profit for San Francisco private equity fund Francisco Partners, which purchased Clicksoftware for $438M in 2015.

Adjust-Unbotify

Adjust, a Berlin-based specialist in mobile ad measurement and fraud prevention, has acquired Israeli company Unboify. Financial details were not disclosed. Unbotify, headquartered in Tel Aviv, has developed a system to differentiate between actual humans and bots by analyzing human data patterns on websites, preventing digital fraud. Unbotify works with e-commerce, social, search and gaming companies in Europe and the U.S.

AMS-Sealantis

AMS, the Austrian-based international medical device company, has acquired Israel’s Sealantis, a developer of adhesives for wound treatment, for $25M. The technology of Sealantis, based on research at Israel’s Haifa Technion Institute of Technology, is designed to stop hemorrhaging, prevent leakage, from the digestive tract into the abdominal cavity, prevent leakage of spinal column fluid, and other applications. The Haifa-based company’s products have been approved for marketing in Europe.

Science & High Technology

Intel’s Big Plans

Intel Corp. will build a NIS 40B ($10.9B) plant in Kiryat Gat, the largest investment of its kind in the country’s history. Finance Minister Moshe Kahlon said in late January that Intel will get a government grant of about $1B, and that the project will create at least 1,000 new jobs.

The announcement came a few weeks after the Knesset Finance Committee approved a NIS 700M grant for expansion of the chipmaker’s production facilities in the southern city of Kiryat Gat. Total cost of the expansion: $5B.

Intel is Israel’s largest private employer and biggest exporter. In 2017, Intel Israel exported $3.6B worth of goods, 8% of all Israel’s high-tech exports.

Three Industries to Watch

Speaking to a late-December business conference in Tel Aviv, Prime Minister Benjamin Netanyahu pointed to three industries that are likely to hold the key to the future of Israeli technology: cybersecurity, automotive and medical information. Israel is already a cybersecurity superpower, he observed, holding 20% of the private market though it has only 0.1% of the world’s population.

In the automotive field, Netanyahu noted that although Israel has no large-scale automobile manufacturer, over 500 companies are developing automotive technology, ranging from Waze, the navigation guide technology, to MobilEye, the machine vision specialist sold to Intel for $15B.

The prime minister said, the best may yet be to come: development of an international database to support personalized medicine all over the world.

Self-Driving Car on Israel’s Roads

Yandex of Russia says that it has been granted Transport Ministry permission to operate its self-driving car on Israeli roads with a safety engineer in the driver’s seat. According to a report in Globes, Israel will be the third country, after Russia and the U.S., in which Yandex has tested its automobiles. The Russian tech giant introduced a prototype last May and has operated it on city streets in Moscow, Innopolis and Skolkovo.

Drive-Over Electric Car Charge

ElectReon Wireless says it has successfully tested its technology for wirelessly powering an electric car mid-drive using its electric road infrastructure. The company, based in Beit Yanai near Netanya, said it powered a Renault Zoe over 25 meters of test road. ElectReon’s system uses special copper coils placed under the middle lane of the road, which are then covered in asphalt, and powered by an underground system. Charging is via a receiver or multiple receivers installed under the car.

Protecting the Weed

Magal Security Systems, based in Yehud not far from Ben-Gurion International Airport, has begun providing security for cannabis growers, according to a report in Globes. Magal’s solutions are tailored to meet the rigorous security standards every country has for its own cannabis growers. In addition to fences, cameras and sensors, Magal’s solutions reportedly include robots to replace human patrols.

Cannabis Connection

MedC Biopharma Corporation of Canada has reached a global licensing agreement for a cannabis-based anti-cancer treatment developed at Israel’s government-owned Volcani agricultural center. MedC, founded by Israeli brothers Avi and Guy Drori, also announced a partnership with a subsidiary of Israel-based Nextar Chempharma Solutions, an outsourcing company for drug development and manufacturing services, to develop treatments. The Volcani Center is preparing to submit the patents for the treatment of Cutaneous T cell lymphoma (CTCL), a type of immune system cancer that is classified by the U.S. Food and Drug Administration as an orphan disease.

Philippine Water Contract

Israel’s Tahal Group and the Filipino Prime Water Infrastructure have signed a $190M contract to provide smart water and wastewater facilities for New Clark City, the Philippines’ first “smart, green and sustainable metropolis.”

Bayer Joins Drip Collaboration

Bayer, the German pharmaceutical giant, is collaborating with Israel’s Ben-Gurion University and drip irrigation pioneer Netafim in a three-year project to develop a drip delivery system for plant protection products. Netafim, founded in three Israeli kibbutzim in the 1980s, was the pioneer of water-efficient drip irrigation for agriculture; it now has Mexican owners, and operations in 100 countries around the world.

Imperva Staff Cuts

Imperva, the Israeli-American cyber security firm acquired by the Thomas Bravo tech investment firm last October for $2.1B, says it will maintain its Israeli operations after reports that it plans major staff cuts. Based in Redwood City, California, Imperva’s founders include Shlomo Kramer, one of the original entrepreneurs of Tel Aviv’s Check Point, the network firewall security pioneer.

Magal Port Contract

Magal Security Systems, the physical perimeter security specialist, has been awarded a $2.5M contract to provide defense systems for the port of Huevo in southeastern Spain. Sensors and intruder-detection technology developed by Magal, which broke off from IAI in the mid-1980s, has been used on the security fence between Israel and the West Bank.

AI Expert Shortage

Israel faces a shortage of experts in artificial intelligence, according to a mid-January report by the Israel Innovation Authority. The report recommended that the government, academia and industry develop a joint strategy necessary to maintain Israel’s position of leadership in the AI sector.

Mapping Team-Up

Jerusalem-based Mobileye, purchased by Intel in 2017 for $15.3B, is teaming with UK mapping agency Ordnance Survey, the UK’s national mapping agency in production of high-precision location data. Ordnance Survey’s geospatial and technology expertise will be paired with Mobileye’s automotive camera-based mapping capabilities in a customizable location-information service to Ordnance Survey customers in various sectors including energy and infrastructure.

Innovation Index

Israel moved up from 10th to 5th place in the prestigious Bloomberg Innovation Index. The U.S. is 8th and Japan is 9th in the seventh annual survey published by the news service.

Teva Sells Tract

Teva Pharmaceutical Industries, the financially troubled Israeli pharma giant, has sold a tract of land in Ashdod on which a Teva medical plant is located to Hiron Investments and Industrial Buildings, an Israel real estate firm, for NIS 109M.

Agricultural AI

Tel Aviv-based SeeTree says it has developed a combination of artificial intelligence, machine learning and agronomic intelligence into technology that utilizes data gathered from the air to monitor the health and growth of tree clusters and individual trees. The company, which says its mission is aiding crop growers around the world, has offices in Brazil and California and an international roster of customers.

Back to top