Two Surprise Bidders Among 12 Eyeing Israel Military Industries

FIMI fund and Bezalel Group join long and possibly growing list of bidders for arms maker.

Alon Ron

Two surprise groups were among the 12 candidates to put in bids to buy control of state-owned Israel Military Industries, the Government Corporations Authority reported over the weekend.

The 12 included unexpected bids from the FIMI private equity fund managed by Ishay Davidi and Hezi Bezalel’s Terra Horizon. FIMI, which has about $2.1 billion under management, would be buying IMI through its FIMI V fund, which has acquired nine companies in the past three years.

Terra Horizon is the investment arm of Bezalel Group, which was formed by Bezalel after a career in teaching, together with an economist at Israel Discount Bank, and operates is 16 countries. Sources said Bezalel wants to expand in Israel in telecommunications, media and technology on top of buying IMI.

In any case, the sources said, Terra Horizon would likely recruit Ido Nechushtan, a former Air Force commander, and Yehiel Horev, a former top defense industry official, if it wins the tender for IMI.

The government expects IMI, which developed the Uzi submachine gun and other arms and ammunition, to fetch as much as $650 million by year end. The sale is part of a broader government plan to sell all of part of eight companies and two ports by 2017, raising around $4 billion.

Other offers came from defense electronics maker Elbit Systems, Israel’s largest publicly traded defense firm, and the New York-based holding company Renco Group, whose holdings include AM General, a maker of special-purpose vehicles for military and commercial customers.

Other bidders include Coleridge Capital, which is controlled by Larry Mizel, whose properties include oil and gas exploration rights in Israel. SKG Group, which is controlled by Sami Katzav and years ago bought IMI’s Uzi business, is also in the running as is the Israeli holding company Mivtach Shamir.

Kanders & Company, a Stamford, Connecticut-based company that specializes in buying undervalued publicly traded companies, also submitted a bid. Sources said Apax Partners, the British buyout fund whose Israeli acquisitions have included the giant dairy company Tnuva and Psagot Investment House, might join it.

The list of buyers may grow. Fortissimo, another big Israeli private equity investor led by Yuval Cohen, told Leumi Partners and Stifel Investment Banking, the two investment bankers managing the privatization process, that it might be interested in joining the budding.

The buyer will now be vetted by the Government Corporations Authority and government officials, checking both the finances of the buyers and any national security concerns. Although IMI’s products range from ammunition to guided missiles, and while the company plays a key role in Israeli defense, the government has agreed that foreigners can bid for it, subject to management and other limitations.