Despite Approvals, Rafael-IMI Merger May Be Appealed

Israel Aerospace Industries has been given two weeks to appeal the decision to merge Rafael and IMI.

The plan to merge Israel Military Industries into another government defense company, preferably Rafael Advanced Armament Systems, may not be final even though IMI workers, the Finance Ministry and the Defense Ministry have agreed to the move.

The parties to the decision are giving another government company, Israel Aerospace Industries, two weeks to appeal the decision.

IAI is expected to appeal the merger in an attempt to make IMI its own, as are several private sector companies, among them Elbit Systems, Israel Shipyards and Israel Weapon Industries. These companies would have to make a particularly attractive offer in order to win over IMI's employees and the government.

If the decision to merge IMI into Rafael goes through, the cabinet is expected to approve it within two weeks, after which time the companies and the government will discuss the terms of the merger. Rafael would purchase IMI's shares and may absorb some of its divisions because of the synergies in their operations.

The government has threatened to stop financing IMI's losses. If it makes good on its threat without the company being sold, IMI would go bankrupt.

IMI's employees have demanded NIS 2 billion in compensation for the privatization move. Half the sum would cover severance payments to 940 workers who would leave before the merger takes effect, while the rest would be paid to those workers who leave afterward.