News Analysis – May 2015

General News Summary

Slimmest Of Margins

Prime Minister Benjamin Netanyahu succeeded in forming a coalition government on May 6, just before his deadline to do so ran out, and by the slimmest of margins. With the support of only 61 of the 120 Knesset members, the future of the new Netanyahu government is far from bright.

The 30 Knesset seats Netanyahu’s Likud secured in the March 17 general elections seemed like a landslide by Israeli standard. Six weeks later, triumph seemed hollow indeed. Netanyahu was forced to make major concessions, allotting ministerial seats, parliamentary positions and promises of financial largesse to potential partners. Equally bad from his standpoint was what was left in the kitty for members of his own Likud, after most senior posts were allotted.

Moshe Kahlon, who had left the Likud two years ago to found “Kulanu,” his own political party, was the main beneficiary. The 55-year-old former communications minister will be finance minister, the post he said he sought all through the election campaign. For Kulanu’s 10 Knesset seats, he also got Housing (for former general Yoav Galant) and Environmental Protection (for Avi Gabbai), as well as the Israel Lands Authority and the national land Planning Administration. The two ultra-Orthodox coalition partners got what they wanted: Shas, representing Jews of Middle Eastern origin, got Economics and Negev and Galilee Affairs for its leader Arye Deri, and Religious Affairs for MK Yaacov Margy. Yaakov Litzman of United Torah Jewry, representing Ashkenazi Jews of European roots, becomes Deputy Health Minister, practically the minister. In addition, Netanyahu promised to roll back cuts in government child allowances which benefit large ultra-Orthodox families most, and repeal the law requiring army service for students in yeshiva religious seminaries for men.

Last in line was the “Jewish Home” party whose leader, former high-tech millionaire Naftali Bennett, was given the prime Education Ministry, plus Agriculture for former Housing Minister Uri Ariel and Justice for Ayelet Shaked. The outspoken Shaked, one of the few secular figures in the religious “Jewish Home,” is an advocate for restraining the power of Israel’s Supreme Court.

Odd man out is former foreign minister Avigdor Lieberman, whose scandal-racked Yisrael Beitenu won only six Knesset seats. Lieberman, whose relations with Netanyahu have evolved from close alliance to open hostility over the past two decades, was promised the Foreign Ministry again. The addition of his party to the coalition would have given Netanyahu’s coalition a relatively comfortable 67 seats. But Lieberman, in a sudden move announced that he wouldn’t join the coalition just two days before the deadline, giving Netanyahu little time, and less leverage, to deal with his other partners.

Netanyahu had a week between announcing his coalition and presenting his government with a list of ministers to the Knesset for approval. During that week, he faced the difficult task to satisfy aspirants for ministerial seats within his own party. Defense Minister Moshe (Bogie) Ya’alon and Transportation Minister Yisrael Katz were the only two assured candidates to keep their jobs. Those waiting in line include former minister Gilad Erdan, most likely in Public Security, former foreign minister Silvan Shalom, Tzahi Hanegbi and Yuval Steinitz (ex-Finance and Strategic Affairs) and Benny Begin, son of party founder Menachem Begin, for senior posts, plus a half-dozen younger party front-benchers anxious for their first chance at ministerial jobs. Even if he succeeds in changing the law limiting the number of full ministers to 18, Netanyahu will not be able to give all seats at the government table. According to most reports, Netanyahu plans to hold Foreign Affairs for himself, apparently in the hope that at some later point he’ll be able to lure opposition Labor party leader Yitzhak Herzog into a much-larger unity government. On top of foreign affairs, Netanyahu decided to keep for himself the Communications portfolio.

The current makeup of the government though is a recipe for instability. A single defection of one of the small parties, of a small-party politician or even a disgruntled member of his own Likud, would cost Netanyahu his 61 seat majority. There seems to be no alternative for Netanyahu other than to try enlarging his coalition, either by courting defectors from other parties (Yisrael Beiteinu’s MKs would seem to be prime candidates) or by co-opting either/or Yesh Atid or Labor, whose respective leaders Yair Lapid and Herzog have committed publicly to remain in the Opposition. In either case, Netanyahu would likely have to take a major step back from his current refusal to conduct serious negotiations with the Palestinians, causing consternation, if not revolt, in his own Likud.

Iran Outlook

Benjamin Netanyahu has continued to fight against the framework nuclear deal with Iran after the two sides reached preliminary agreement in talks at Lausanne, Switzerland in early April. In repeated statements, the Israeli leader severely criticized what he called capitulation to Iran, allowing Tehran to maintain key elements of its nuclear program even as it seeks to acquire weapons of mass destruction and destroy the Jewish state.

Neither Israel nor Netanyahu has commented directly on the overwhelming approval by the U.S. Senate giving Congress the power to review any final agreement reached with Iran in the second, practical phase of the negotiations. President Obama dropped initial opposition to the bill, which passed the Senate in a 98-1 vote and is likely to win a large majority in the House of Representatives, after seeing that it was likely to pass.

It is premature, however, to be sure that Netanyahu’s allies in the Republican-dominated Congress will be able to nullify any agreement that is reached. President Obama retains veto power over any bill disapproving a possible pact, and the two-thirds majorities in the House and Senate necessary to override such a veto are far from assured.

Nor is there any assurance that such a deal will finally be reached. The agreement struck in Lausanne is vague on timing. Iranian leaders have said there’s no deal unless sanctions against the Islamic Republic are lifted immediately, the U.S. says that their removal will take place only over time, as Tehran meets some landmarks in the process of cutting back on the number of centrifuges it operates and nuclear research.

Israel has also presented the U.S. with a list of objections to the Lausanne agreement, proposing changes which would make it more acceptable. According to press reports, these include requiring Iran to allow nuclear inspectors into the country anytime, anywhere.

Defense

And Then There Were S-300s

President Vladimir Putin’s announcement that Russia was reviving the deal to sell advanced S-300 anti-aircraft missile systems to Iran has raised strong Israeli objections. Prime Minister Netanyahu voiced his objections in public and in a telephone conversation with Putin, asking, “After this weapons deal, is there anyone that still seriously claims that this agreement with Iran will make the Middle East safer?”

Both Putin and U.S. President Obama have tried to minimize the impact of the missiles. Putin, who subsequently warned Israel against selling arms, including UAVs, to Ukraine, tried to convince Netanyahu that the S-300s were a purely defensive system, and Obama said that the U.S. could penetrate the defenses, “if necessary.” And a week after the sale was announced, Deputy Foreign Minister Sergei Ryabkov said that delivery won’t occur soon, and only happen after political and legal issues were resolved.

Iran currently lacks advanced air defenses that could knock out modern fighter aircraft in the US or Israeli air forces. The S-300 is designed to detect and destroy ballistic missiles, cruise missiles and aircraft at low altitude.

Russia and Iran originally agreed in 2007 on the $800M sale of five S-300 batteries. But the deal was canceled in 2010, after being specifically prohibited in a U.N. Security Council resolution.

…And The F-35

Lockheed’s fifth generation F-35 multi-role plane will begin arriving in Israel at the end of next year. According to Steve Over, director of the F-35 International Business Development, the F-35 “has the capacity” to deal with advanced surface and airborne threats, apparently including the S-300. But, he said, the difference between the F-35 and older jets like the F-16 is qualitative. The older platforms, Over suggests, have reached their limit. In addition to its stealth abilities and greater maneuverability, the F-35’s advanced multi-spectral sensors will provide the Israel Air Force with unprecedented situational awareness.

Over said that Israeli pilots who have begun training with the platform say it has caused them to think differently about combat flying. Unlike previous platforms, the F-35’s data links and sensors enable formations where planes are between 70 and 160 kilometers apart, and remain undetectable to enemy radars.

Tunnel Alert

Amid reports that Hamas has been rebuilding its subterranean infrastructure, the Israel Defense Forces in early May decided to search for a possible attack tunnel running below a village on the Gaza border. The decision follows a report by a private company hired by residents of Kibbutz Nirim, who say that they have been hearing underground construction noises, that a tunnel was indeed being built.

Earlier, Israeli security sources said that nearly 1,000 Hamas militants are currently involved in the process of rebuilding an underground tunnel network, which was largely destroyed by the IDF during Operation “Protective Edge” last summer. The IDF estimates that the Islamist group will build a sizeable number of tunnels before the next round of fighting, but that it is unlikely for attacks to be carried out in the meantime.

In a related development, the Armed Services Committee of the U.S. House of Representatives in late April approved an amendment to the annual defense policy bill that would allow the U.S. and Israel to develop an “anti-tunneling system.” U.S. Reps. Gwen Graham (D-FL) and Doug Lamborn (R-CO) are the sponsors of the U.S.-Israel Anti-Tunnel Defense Cooperation Act to authorize research and development of an anti-tunneling defense system. Lamborn compared the proposed project to the Iron Dome missile-defense system, developed by Rafael with U.S. funding assistance, which he said saved the lives of “thousands of Israeli citizens.”

Yediot Aharonot Hebrew-language daily reported in mid-April that a revolutionary new tunnel-detection system had already been tested. The paper said that the system includes a series of high-tech sensors that will provide data, deciphered by advanced algorithms and will enable security forces to detect and locate tunnel-digging operations. According to a report on Israel’s Galei Zahal Army Radio, an elite IDF ground force is already being trained for tunnel warfare.

Iranian Arms

Israel will not permit supply of advanced weapons to terror organizations, Defense Minister Moshe (Bogie) Ya’alon said in late April, a day after a reported Israel Air Force strike on a Syrian Army base where Hizballah is said to store long-range missiles.

The daily Ha’aretz, quoting Lebanese sources, said Syrian President Bashar Assad suspected the air raid near Damascus might indicate Israel planned a larger attack. There have been reports that Hizballah has built a new airstrip in Lebanon, from which it plans to launch unmanned aerial vehicles.

Sudan Strike

Arab media reports claim that Israel was behind an early-May fighter-jet attack on a Sudanese factory producing long-range missiles and other advanced weapons. Israel has not commented on the reports of the strike in Omdurman, near Khartoum. In a separated development, Sudan claims to have shot down an Israeli unarmed aerial vehicle that entered its airspace.

According to foreign reports cited in Globes business daily, the target of the attack was a weapons storage facility containing arms for transport to Gaza or terror groups in Egyptian Sinai. The facility, according to the reports, had been moved from Libya to Sudan.

Magic Wand/David’s Sling Passes

Only one more before Israel’s medium-range missile interceptor system, David’s Sling (also known as Magic Wand) becomes operational. In a late-March test, an interceptor launched at a target rocket “destroyed the target as planned,” the Defense Ministry said. It was the third interception test for the system, which is designed to intercept medium-range rockets and missiles. The previous interception test, at the end of 2013, was also successful. Tests were carried out jointly by the U.S. Missile Defense Agency and Israel’s Ministry of Defense.

David’s Sling/Magic Wand was developed jointly by Israel’s Rafael and Raytheon of the U.S. Current plans are for delivery to the Israel Air Force late this year, becoming operational in early 2016. The system will supplement Israel’s Iron Dome for short-range missiles and the Arrow missile defense system against a variety of threats, medium and long range. The IDF Home Front Command says that the Lebanese Hizballah Shi’ite terror organization could launch as many as 1,000-1,500 missiles a day in a war with Israel.

The Economy

Culinary Conquest

The Palomar in London’s Soho, owned and operated by restaurateurs from Jerusalem’s “Mahane Yehdua” market, has won the Veuve Clicquot GQ Food and Drink Award as Britain’s best restaurant. Founded a year ago by the owners of Jerusalem’s trendy Machneyuda Group, Palomar has also been named one of the British capital’s top five restaurants by Time Out London, named as the hottest eatery by the Londonist website, and earned honorable mention in the most recent edition of the super-prestigious Michelin Guide. The owners of Palomar, which opened in the spring of 2014, plan to open another place in East London.

Best Workplaces

The Israel Electric Corp., long famous for its generous conditions of employment and benefits, remains the best place in Israel to work according to an annual survey by The Marker, the economic supplement of Ha’aretz and the BDI research firm. Second place in the survey, which covered 2014, went to Google, followed by Intel, Bank Leumi, Teva Pharmaceutical Industries, Hewlett-Packard, Elbit Systems, Israel Aerospace Industries, Bank Hapoalim and Amdocs.

Netanyahu’s Economic Goal

Prime Minister Netanyahu’s economic thinking is principally focused on only one major factor, GDP growth, according to Sever Plocker (pronounced Plotzker), chief economic commentator of Yediot Aharonot. Netanyahu’s goal is a GDP of $400M, about $45,000 per capita, by the projected end of his just-beginning term of office in four years. This, according to Plocker, necessitates annual growth rates of about 5%.

Plocker suggests that in setting this goal, the Israeli prime minister is trying to match the record of his Indian counterpart, Prime Minister Narendra Modi, whose admiration of Israel has been an open secret ever since he was chief minister of Guajarat state, where he reportedly had a big picture of Ariel Sharon hanging in his office.

Relations with India have improved greatly since Modi took office. Defense purchases have been encouraged, Israeli technology companies have been, according to Plocker, “met with open arms” and cooperation agreements have been signed. Even prior to Modi’s reign, part of the Indian Tata Group has invested millions in a fund run by Ramot, Tel Aviv University’s technology transfer firm, and Israeli biotechnology companies have begun operating in India.

New Treasury D-G

Shai Babad is expected to be named the Treasury’s new director-general. Babad, a former CEO of the Zim shipping company, replaces Yael Andorn, who resigned shortly after the March 17 Knesset elections.

Growth Prediction

Moody’s Investors Service anticipates Israeli GDP growth of 3.3% in 2015, driven by strong demand for Israeli products and higher domestic investment. In addition, the global ratings system said that it was maintaining a stable outlook for Israel’s banking system for a second successive year, based on Moody’s expectation of robust economic growth, rising capital buffers, strong liquidity and the maintenance of stable deposit-based funding. The outlook also takes into account the downside risks posed by a potential rise in geopolitical tensions and a rapid rise in home prices, as well as the banks’ relatively weak, though stable, efficiency and profitability.

Sodastream Move

Sodastream International says that the closing of its factory in the West Bank is moving ahead faster than planned. The company has stressed that the shut-down is part of an economically-based company reorganization. The firm, which manufactures a device for making carbonated drinks at home and was embroiled in controversy last year with the BDS “Boycott of Israel” movement involving its brand ambassador, Hollywood actress Scarlett Johansson, is also closing another plant, in northern Israel.

Finance & Investment

Abramovich Arrives

Russian-born billionaire Roman Abramovich has launched a flurry of investments in Israel this year. The latest is as lead investor in a $15M round of financing for Music Messenger of the Glil Yam Group, in which the owner of London’s Chelsea football team leads a group of entertainment celebrities including rappers Will.I.Am and Niki Minaj and French disc jockey-record producer David Guetta. Previous Abramovich Israeli investments include IAngels, a small-sum investment firm in which he led a $2.5M financing round in early March, $10M investment in Storedot, which develops technology for very high speed charging of smartphones, and a $2M investment in AcousticEye, which uses sound waves to test pipes.

Abramovich recently paid about $25M for the Varsano Hotel in Tel Aviv’s gentrified Neve Tzedek neighborhood. According to press reports, the billionaire intends to turn the 19th-century structure into his Israeli residence. The property was purchased from local businessmen and brothers Guy and Yaron Varsano. Yaron Varsano is married to Israeli and Hollywood actress Gal Gadot, best known for her role as SuperWoman.

Fortissimo Fund

Fortissimo Capital, a private equity firm based in Rosh Ha’ayin northeast of Tel Aviv, has closed Fortissimo Capital IV, its fourth fund, with commitments of around $470M. Fortissimo now has four funds, with a total of close to $1B under management.

Cockpit Takes Off

El Al Israel Airlines has launched Cockpit, a program designed to assist Israeli start-ups in the tourism and aviation field. In addition to providing seed financing and business guidance from El Al, Cockpit start-ups will benefit from membership in Microsoft’s Israel Accelerator.

The airline plans to include about 10 companies in Cockpit. Two have already been chosen: Shopnfly, which provides in-flight duty-free shopping price comparison, and BidFlyer, a new channel for purchasing low-priced airline tickets.

Windward Investment

Hong Kong-based billionaire Li Ka-shing’s Horizon Ventures has led a $10.8M investment round in Tel Aviv’s maritime data firm Windward. Other investors in the strategic round include Angelic, the family office of Tom Glocer, former CEO of Thomson Reuters.

Marint, Windward’s intelligence solution, is designed to detect potential threats at sea. It is widely used by intelligence, security and law enforcement agencies around the world. Former IDF chief of staff Gabi Ashkenazi recently became a member of Windward’s advisory board.

$1.2B Valuation for Infinidat

Infinidat, a developer of advanced enterprise-class storage solutions, has raised $150M in a financing round led by TPG Growth of the U.S. The money for the company founded by its current CEO, Moshe Yanai, headquartered in Needham, Massachusetts with an R&D center in Herzliya Pituah, was raised at a current value of $1.2B.

US $Billion Raised by Local Start-Ups

$944M was invested in Israeli start-ups in the first quarter of 2015, the second-largest quarterly sum in a decade and a 48% increase over the parallel quarter of 2014, the IVC research firm reported. The sum was exceeded only by the $1.1B raised in the fourth quarter of 2014.

Mergers & Acquisitions

Teva-Auspex and Mylan

Teva Pharmaceuticals, Israel’s world-class pharmaceutical firm based in Jerusalem and Petah Tikva, has completed the $3.2B acquisition of Auspex Pharmaceuticals of La Jolla, California. Auspex is an innovative bio-pharmaceutical company specializing in applying deuterium chemistry to known molecules to create novel therapies with the potential for improved safety and efficacy profiles. Its lead compound is SD-809 for the potential treatment of chorea associated with Huntington’s disease, tardive dyskinesia, and Tourette syndrome.

In another development, the Bloomberg news service has reported that Teva is negotiating with eight banks in an effort to raise over $20B to finance its hostile takeover bid for Mylan, the Canonsburg, Pennsylvania-based generic drug company that is itself seeking to take over Perrigo, a competitor of both Mylan and Teva.

Francisco Partners-Clicksoftware

Francisco Partners, a U.S.-based private equity firm, has acquired Israeli mobile workforce solutions developer ClickSoftware Technologies for $438M. When the transaction is completed in July, ClickSoftware will delist from NASDAQ and become a private company.

ClickSoftware, which has headquarters in Petah Tikva just east of Tel Aviv, has 740 employees. Founder Moshe BenBassat and members of his family hold 13% of Clicksoftware. Other investors include George Soros’s investment fund, with 10%, and FMR with 9%.

Market Tech-Stucco Media

Market Tech Holdings, owned by Israeli billionaire Teddy Sagi, has acquired Tel Aviv-based Stucco Media for a total of $34.5M in cash, shares and milestone payments. Stucco was founded in 2012 by two young Israelis shortly after they left the IDF Intelligence Corps.

Sagi’s Market Tech owns and manages London’s famous Camden Market. The Stucco acquisition fits into his successful strategy of buying Israeli technology to make market trading more technology-oriented and user-friendly.

Blackberry-Watchdox

BlackBerry, the Canadian mobile phone manufacturer, has purchased WatchDox, an Israeli file-sharing security firm based in Petah Tikva and Palo Alto, California. Purchase price was not reported, but was estimated in the $100M range. BlackBerry reportedly will set up an Israeli development center at WatchDox’s facility in Petah Tikva.

WatchDox shareholders include serial entrepreneur Shlomo Kramer, the firm’s chairman, MTVP, Shasta Ventures, Blackstone, private investors and Mickey Boodaei and Rakesh Lonkar, with whom Kramer founded Trusteer, sold to IMB in 2013 for $700M. According to Globes, WatchDox is Kramer’s third recent exit, after he sold Lacoon and HyperWise to Israeli Internet firewall security giant CheckPoint Technologies earlier this year.

Checkpoint-Lacoon

Internet and network security provider CheckPoint Software Technologies has purchased Israel-based Lacoon Mobile Security. Exact price was not disclosed, but earlier reports said negotiations between the two companies centered on $80M.

Lacoon’s product, which helps to prevent cyber-attacks on mobile phones and is used by customers, including Samsung, Intel and Dell, will be integrated into CheckPoint’s own mobile security solution, Capsule. Lacoon, which was founded in 2011 and employs 40 people, can support up to 300,000 mobile devices.

It was CheckPoint’s second Israeli acquisition this year. In February, the Tel Aviv-based cyber security leader bought start-up Hyperwise. It also plans to hire 600 workers in Israel this year.

Comverse Moves

Amdocs, a world leader in billing and business systems based in Ra’anana, northeast of Tel Aviv, and St. Louis, Missouri, has acquired the business support systems of Comverse Ltd., another Israeli company. Sale price was $272M in cash.

Comverse, formerly one of Israel’s flagship high-tech companies, is in the process of gradually divesting its assets. It recently announced a cooperation agreement with India’s Tech Mahindra, which includes the transfer of 400 Comverse digital services employees to the Indian company, though they will remain in Israel. Comverse will continue to exist as a separate company, with a focus on expanding its global market leadership in digital services.

FIMI’s Polyram Stake

FIMI, an Israeli private equity firm, has purchased 65% of the business of Polyram for NIS 347M (about $91M). Polyram, based in Moshav Ram-On in northern Israel, produces engineering thermoplastic compounds for the automotive, electrical, irrigation, D.I.Y.P, and construction industries.

Dentsu-abaGada

abaGada, an Israeli performance advertising specialist, has been purchased by Dentsu Aegis Network, a division of Japan’s Dentsu Inc. Purchase price was not announced, but is estimated to be in the $60-$90M range, depending on landmark performance. Clients of abaGada, which is based in Tel Aviv, include Israeli television production company Keshet, Bezeq International, Kia, Issta, Google, Danone and Johnson & Johnson. abaGada is the first Israeli investment of Dentsu, which has a market cap of $13B.

LiveU Denial

LiveU, the Kfar Saba-based leader in portable live video acquisition, contribution and management solutions, has denied a Yediot Aharonot report that it is discussing its acquisition by a large technology company for $150-$200M. LiveU offers a range of devices for live video coverage, including backpacks, software and mobile applications. LiveU’s solutions include multiple 4G LTE/3G, HSPA+, WiMAX and Wi-Fi cellular links optimized for maximum video quality based on the available network conditions.

Apple-Linx

Computer giant Apple has acquired LinX Computational, an Israeli developer of camera technology for tablets and smartphones for an estimated $20M. LinX, based in Caesarea about midway between Tel Aviv and Haifa, says its cameras, which use sensors to capture multiple images simultaneously, can gauge depth and create 3-D image maps. It says its technology produces the quality of single-lens reflex (SLR) cameras without the bulky conventional camera case.

Pitney-Bowes-Borderfree

Pitney-Bowes Inc., a global provider of technology-based commercial solutions, has acquired Israel’s Borderfree for $395M. Founded in 1999 in Israel under the name FiftyOne, as a forex conversion site for retailers, Borderfree subsequently expanded its business to provide worldwide e-commerce services for American retailers. The company currently has headquarters in New York and a development center in Tel Aviv.

Google-Timeful

Google Inc. has acquired Timeful, developer of an application time and calendar-management application that will be integrated into Gmail and other Google communications technology. Purchase price for Timeful, started by Israeli professors Dan Ariely and Yoav Shoham together with CEO Jacob Bank, is estimated to be tens of millions of dollars.

Shoham, a professor of computer science at Stanford University specializing in artificial intelligence, sold his previous startup, Katango, to Google and is now joining the search-engine firm as full-time chief scientist. Ariely and Bank are both former Google staffers. Their application is able to identify behavioral patterns, and prioritize the user’s tasks and meetings according to his preferences.

Other Israeli time-management applications on the market include Any.Do, 24me, Meeter, and Meekan.

Science & High Technology

Cyber-Center Effect

Events since the start of 2015 indicate that Beersheba may be on the way to fulfilling Israel’s hope for the Negev city to become “the cyber center of the Western Hemisphere.” An article in Ha’aretz noted that in January, a report by the Brandeis International Business School and T3 Consulting Group, ranked Beersheba first among seven global cities expected to become important high-tech centers. The new Beersheba Advanced Technologies Park is expanding, with construction of new buildings and the sale of Beersheba-based CyActive to online payment giant Paypal, which will set up R&D operations in the city. A Final agreement between the Finance and Defense ministries for the transfer of IDF bases to southern Israel. The agreement includes bases in Glilot and Ramat Gan in the center, housing technical intelligence units including the well-known 8200, which is due to be based just outside the high-tech park when it relocates in 2020.

New Teva Generic

Teva Pharmaceutical Industries has launched the generic equivalent to Abilify (aripiprazole), an antipsychotic medication for treating schizophrenia and acute manic and mixed episodes associated with bipolar I disorder. Abilify, marketed by Otsuka Pharmaceutical, had annual sales of roughly $7.8B in the U.S.

PCB-India Talks

PCB, a manufacturer of printed circuit boards based near Migdal Haemek in northern Israel, reportedly, is negotiating with an unnamed Indian firm to establish a circuit board factory in the Subcontinent. Investment in the joint venture, which is still in the negotiation stage, is said to be about $60M. PCB is controlled by the Priortech Group, which provides capital equipment, technology and manufacturing service to global high-tech electronics industries. Shareholders in Priortech, whose subsidiaries also include optical inspection systems maker Camtek, include PCB chairman Rafi Amit and CEO Yotam Stern.

Fast Rise

SimpliVity, a leader in hyper-converged infrastructure for Information Technology, has become the fastest infrastructure company ever to achieve a valuation of $1B. The Westborough, Massachusetts-based company founded by Doron Kempel, former deputy commander of the IDF’s famed Sayeret Matkal commando unit, achieved the status within 23 months of shipping its first product. The company is Kempel’s second; in 2008 he sold Diligent to IBM, which called it “the best-run small company IBM has ever acquired.” Kempel, now 53, left the IDF in the wake of the 1992 Tzeelim Bet training accident in which five soldiers, reportedly preparing for a daring behind-the-lines operation, were killed.

Technion, India’s Sun Cooperate

The Haifa-based Technion Institute of Technology’s T3 commercialization subsidiary and India’s Sun Pharmaceutical Industries have agreed to cooperate on the development of new cancer-treatment products. Development will be based on research conducted by Technion Nobel Prize Laureate Prof. Aharon Ciechanover and other Technion staff members. As India’s largest producer of generic pharmaceuticals, Sun Pharma is a major competitor of Israel’s Teva Pharmaceutical Industries.

Indian Courtship

Mukesh Ambani, India’s richest man, appears to be taking news reports that he’s interested in Israeli investments seriously. A month after Bloomberg news agency said that he was eyeing such investments, a group of Israeli tech companies were in India for a conference organized by Reliance Industries, which Ambani owns. Among the firms participating in the early-May conference: SimilarWeb, which has developed a traffic monitoring and analysis tool for websites and applications; Celltick, a provider of medical services for mobile platforms; Winapp, whose technology links the print and digital worlds; Perion Network, a marketer of software and applications and Outbrain, developer of a website-recommendation engine.

Instant Eats

Two Israelis have invented a machine that turns out hot meals of your choice in less than a minute. The Genie is about the size of a coffee machine uses pods containing natural ingredients to produce what it says is a virtually unlimited variety of dishes. “The dish can be anything, it can be a meal like chicken with rice, couscous with vegetables or an amazing Ramen or even a chocolate soufflé or any other desert that you want,” explains Ayelet Carasso of White Innovation, who created the device together with Doron Marco. Carasso and Marco got the idea for the device and pods after struggling to find restaurants that delivered to their office in Rishpon, north of Tel Aviv, during a late-night work session. They describe the idea as a real life version of Star Trek’s “replicator” device used to synthesize meals on demand on board the TV series fictional starship.

Aerospace & Defense

Record IDF Domestic Procurement

Israeli domestic defense procurement in 2014 added up to an all-time record NIS 14.1B (more than $3.5B), well over the multi-year average of NIS 8-9B. According to the Defense Ministry’s Procurement and Production Directorate, rapid acquisition of arms used in last summer’s Operation Protective Edge accounted for much of the difference. The directorate said that roughly half of the NIS 8.6B spent on Protective Edge came from Israeli suppliers, including ammunition, spare parts for maintaining the air force’s planes, intelligence and computer equipment, food and equipment for soldiers.

New Subs

Tanin (Crocodile) the Israel Navy’s fourth submarine, was due to become operational in early spring. A fifth sub, the Rahav, is now in the final stages of construction at the Howaldtswerke-Deutsche Werft shipyards in Kiel, Germany. Israel is expected to officially take control of the ISS Rahav in a few weeks, when it will begin its maiden voyage from Germany to Israel. Rahav is due to become fully operational about six months after it arrives in Israel. During that time, various Israeli weapons and communications systems will be fitted.

Cyber-Defense Not All

Countries can no longer concentrate on defense against cyberattack but must develop a strike capability against potential enemy targets, former IDF Military Intelligence chief Amos Yadlin told a Washington, D.C. conference in early May. Yadlin, the reserve major-general who was the Labor party’s presumed candidate for defense minister in the recent Knesset elections, said that “building a cyber-wall-of-defense around strategic national assets is not enough. A country’s cyber-defense toolbox must include advanced attack capabilities. This combination is essential for effective cyber-defense.”

Senior Israeli and U.S. defense officials participated in the conference, which focused on increased American-Israeli cooperation in the cyber field. Suggesting that current cooperation in the cyber-arena is not ideal, Yadlin said that Israeli-U.S. partnership in missile defense, which produced the Arrow, Iron Dome and David’s Sling, is a model of cooperation to be emulated.

Rafael’s Yaari Retiring

Vice Admiral (ret.) Yedidia Yaari has announced he is retiring from Israel’s Rafael after 11 years as the defense contractor’s CEO and president. Prior to joining Rafael, Yaari was the commander of the Israel Navy, in which he had served for 36 years. He will remain in his post until a replacement is named.

IMI Fortified Inspection Station Development

Israel Military Industries has developed a fortified inspection station for the protection of security personnel and civilians at the entrance to settlements. The station, developed to protect against the kind of casualties suffered during last summer’s Operation Protective Edge, can withstand direct rocket hits. The first station has been deployed at the entrance to the Kfar Silver village near the southern Israeli city of Ashkelon.

IMI Acquisition Bidders

Ofer Eini, the former head of the Histadrut trade union federation, and incumbent Manufacturers Association president Shraga Brosh have allegedly formed a Group to bid for the soon to be privatized Israel Military Industries, according to a report in Calcalist, the economic supplement of Yediot Aharonot. According to the paper, funding will come from the Blackstone fund. Other expected bidders for the privatization sale include Elbit Systems, Apax, Fortissimo, Israel Shield and the Samy Katsav Group.

Sea Hawks

The Israel Navy plans to acquire 10 Sikorsky used Sea Hawk helicopters from the U.S. Army, replacing outdated Panther copters currently in service. Sea Hawk is the maritime version of the Black Hawk helicopter already in use in the Israeli Air Force. It can operate in longer ranges and can carry more equipment and soldiers, allowing the Israeli Navy to expand its range in the Mediterranean and Red Seas, where it has been operating in the past years to thwart terror and arms smuggling.

Namer Order

The Ministry of Defense has signed a $310M contract with General Dynamics Land Systems to continue manufacture of Namer hulls and kits for the production of Israel’s Namer armored personnel carrier. The six-year contract is to be funded with annual U.S. military aid, with work performed at the Ministry of Defense Masha facility near Tel Hashomer in central Israel. The platforms will come with Rafael’s “Trophy” (aka “Windbreaker”) active protection system and RWCS – Remote Weapon Control Station. The contract comes after an earlier deal with the American company to produce Namer hulls and kits worth $250M. The Defense Ministry decided to order additional APCs as a lesson from last year’s Operation “Protective Edge.”

Rocket Test Ballistic Rocket System

Israel has conducted a test in space of a ballistic rocket propulsion system capable of reaching great distances and carrying satellites into space, according to Israeli newspaper reports.

The paper said that the early-May test had been planned far in advance. Foreign sources reported two years ago that a similar launch was an early test of a Jericho-3 rocket with a range of 4,000 km.

Threat Detection

Lockheed Martin, the U.S. defense contractor, has participated as a strategic investor in a $25M round for Cyberreason, based in Tel Aviv and Cambridge, Massachusetts. Cybereason’s platform helps reduce the endpoint detection and response time by continuously “hunting” for known and unknown malicious activities within an environment. The company says its Endpoint Detection Suite can analyze up to eight million events per second to detect key elements of an attack, including its timeline, root cause, adversarial activity, malware involved, and communication inside and outside of the environment and the affected endpoints and users.

Printed Aircraft Parts

Stratasys, the Israeli world leader in 3-D printer technology, has produced more than 1,000 flight parts for European aircraft manufacturer Airbus. Stratasys, based in Rehovot southeast of Tel Aviv, says the parts for the Airbus A350 XWB aircraft were delivered in December 2014.

The 3-D printed parts replaced traditionally manufactured parts to increase supply chain flexibility, enabling Airbus to meet its delivery commitment. The two companies have been cooperating since 2013. The Airbus parts are made with Stratasys’s ULTEM™ 9085 resin, which provides high strength-to-weight ratio and is FST (flame, smoke, and toxicity) compliant for aircraft interior applications.

Special Glasses

IDF Unit 9900, specializing in visual intelligence, hasn’t won the headlines or spawned the successful start-ups of the better-known Unit 8200. Its latest development, unique reality glasses that provide soldiers in the field with information on the landscape and enemy activity, may change all that. The unit’s commander compares his force to Google Glass.

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