Business in Brief: Elbit Systems Says It Has Reached Agreement to Buy Rival Defense Contractor IMI

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Elbit Systems says it has reached agreement to buy rival defense contractor IMI

Defense firm Elbit Systems said on Tuesday that it has reached an agreement with the government to buy state-owned rival IMI Systems for up to $522 million, although the deal still requires approval from the Antitrust Authority. The government announced its intention in 2013 to privatize IMI, a manufacturer of military systems best known for being an early maker of the Uzi submachine gun. Elbit was the last remaining bidder among five that had shown interest. Elbit said it will pay about $495 million up front, with an additional payment of approximately $27 million contingent upon IMI meeting certain performance goals. Completion of the deal would likely see Elbit top Israel Aerospace Industries as the country’s biggest defense contractor. Elbit Systems’ shares closed down 1.3% at 432.30 shekels ($11.90) on the Tel Aviv Stock Exchange (Reuters and TheMarker)

Intel has paths around Trump’s China tariffs, including Israel, analysts say

Intel, the world’s biggest chipmaker by revenue, could avoid the most severe effects of a new list of Chinese tariffs proposed by U.S. President Donald Trump by shifting its production among its facilities, analysts said Monday. Intel produces raw chips at six so-called wafer fabs, including one in Israel as well as three in the United States, one in Ireland and one in China. From there, chips go to so-called assembly and test facilities. On Friday, Trump said he planned to push ahead with tariffs on $50 billion worth of Chinese imports. While chips were largely spared from the initial list of targeted goods released in April, U.S. trade officials on Friday released a second tariff list of 284 products worth $16 billion that includes the processor and memory chips at the heart of Intel’s business. Those tariffs will not go into effect until after a public comment period, and there is a chance that chips could be cut from it before it is made final, analysts said. (Reuters)

After 151% price jump, Galmed Pharma seeks to raise $75 million in stock offering 

The Israeli drug firm Galmed Pharmaceuticals, which is developing a drug from the treatment of NASH, nonalcoholic fatty liver disease, is taking advantage of its stock’s strong performance last week on the Nasdaq exchange following clinical trial results for the drug to issue another $75 million in ordinary shares in an underwritten public offering. Galmed shares jumped 151% last week to $17.59 per share, reflecting a company market cap of $285 million, following release of mixed Phase 2 trial results on the drug, an oral therapy called Armachol. The company’s share price dropped back 9.1% on Monday on the Nasdaq, closing at $14.91. Galmed, which is based in Tel Aviv, said it would use the funds from the new stock offering for the development of Armachol and for other corporate development and corporate activities.  Investor sentiment was apparently buoyed by positive aspects of the results on a drug in light of the prevalence of NASH and the fact that there is currently no drug treatment for it. (Yoram Gabison)

National Economic Council chairman calls for rethinking importance of weaker shekel

The chairman of the National Economic Council in the Prime Minister’s Office, Avi Simhon, told an economic conference on Tuesday that despite the Bank of Israel’s efforts to tamp down the strong shekel, primarily by buying up tens of billions of dollars, there are a large number of advantages of a strengthening Israeli currency. Speaking at the Israel Democracy Institute’s Eli Hurwitz Conference on Economy and Society in Jerusalem, Simhon said Israel has a current account surplus, which supports a strong shekel and is caused by the growth of Israel’s high-tech sector, which accounts for much of Israel’s exports, and the discovery of natural gas off Israel’s Mediterranean coast, which reduces the country’s fuel imports. Although a strong shekel may hurt some sectors, such as the textile industry, it will help others, such as the food manufacturing sector, he said. Responding to Simhon, central bank Governor Karnit Flug said Israel’s foreign currency reserves have been stable at 32% of GDP and are not larger that many other small open economies. (Avi Waksman)

TASE shares slip, in keeping with declines  in markets elsewhere around the world

Like the negative sentiments among investors abroad, the leading Tel Aviv Stock Exchange indexes declined in Tuesday’s trading. The Tel Aviv-35 index and the Tel Aviv-125 both lost 0.5% on the day, closing respectively at 1,524.90 and 1,276.08 points. Trading volume was 1.2 billion shekels ($330 million). Among stocks of note, Super-Sol shares lost 6.1% closing at 22.06 following news of a share offering of a portion of controlling shareholder Discount Investment Corp.’s to institutional investors. (Eran Azran and Reuters)

An Elbit Systems Ltd. Hermes 450 unmanned aerial vehicle (UAV) stands on display at the Singapore Airshow held at the Changi Exhibition Centre in Singapore, on Feb. 16, 2016.Credit: Bloomberg