Israeli Drone-maker Aeronautics Rejects State-owned Firm's Buyout Offer as Too Low

Business in Brief | Elbit shares drop after disappointing second-quarter results ■ Cellcom moves to quarterly loss due to cost of layoffs ■ Shares break six-day drop to end sharply up

File photo: Employees clean an Aeronautics Defense Systems Ltd. Aerostar Tactical drone.
Bloomberg

Aeronautics rejects Rafael buyout offer as too low

Aeronautics, an Israeli maker of military drones, said Thursday it was rejecting a 430 million shekel ($117 million) acquisition offer from state-owned Rafael Advanced Defense Systems and businessman Avihai Stolero, a week after it was made. “The company’s board has decided to reject the proposal, among other reasons, because of the amount offered,” Aeronautics said in a statement to the Tel Aviv Stock Exchange. The Rafael- Stolero offer was 11.5% higher than Aeronautics’ market cap when it was made. But Aeronautics shares rose in response to the news and have erased the gap, leaving it with a market cap some 23 million shekels above the Rafael-Stolero offer. The two may yet raise their offer, which Aeronautics hinted in Thursday’s announcement might then elicit a positive response. Aeronautics shares, which are still worth less than half of what they were when the company went public in June 2017, ended up 2.3% at 8.34 shekels. (Guy Erez) 

Elbit shares drop after disappointing second-quarter results

Elbit Systems shares sank Thursday after it reported disappointing second-quarter results. The top-line figures looked impressive, with net profit rising nearly 47% to $91.9 million, or $2.15 a share, and revenue climbing 9% to $892.2 million. But the defense electronics maker said net profit was boosted by one-time factors amounting to more than $45 million, including changes in its equity stakes in two subsidiaries. Without the one-time items, second-quarter net was $46 million, down from $63 million a year earlier.  Meanwhile, the revenue boost was mainly due to Elbit’s adoption of the new ASC 606 accounting standard as of January 1. The results of this quarter for the first time include those of Universal Avionics, a commercial avionics company that Elbit acquired. Elbit’s orders backlog climbed to $8.07 billion at the end of June from $7.33 billion a year earlier. Shares of Elbit finished 6% lower at 426.50 shekels ($115.98). (Guy Erez)

Cellcom moves to quarterly loss due to cost of layoffs

Cellcom Israel, the country’s largest mobile operator, moved to a loss in the second quarter mainly because of a one-time charge for the voluntary retirement of 200 employees. Cellcom posted Thursday a net loss of 37 million shekels ($10 million), compared with a net profit of 45 million a year earlier, while revenue slipped 3.6% to 927 million shekels. Analysts, on average, forecast a loss of 17.75 million shekels on revenue of 930 million, according to a Reuters poll. The retirement plan cost 26 million shekels, but CEO Nir Sztern said the company would enjoy cost savings from the move in the next quarter. Cellcom’s internet TV service boosted its subscriber base 42% from a year earlier to 195,000 and its internet service by 31% to 248,000. Despite continued stiff competition in its core mobile telephony business, Cellcom increased its subscriber count by 1.1% to 2.809 million. Cellcom shares ended down 1.2% at 20.90 shekels (Guy Erez)

Shares break six-day drop to end sharply up

The Tel Aviv Stock Exchange ended a six-session strong of losses to end sharply higher Thursday as Teva Pharmaceuticals rallied. A higher Wall Street opening gave local shares an extra boost toward the end of the trading day. The benchmark TA-35 index closed 1.15% higher at 1,582.79 points, while the TA-125 rose more than 1% to 1,418.09, on turnover of 1.07 billion shekels ($290 million). Teva jumped 4.5% to 84.30 shekels a day after news that Warren Buffet’s Berkshire Hathaway raised its stake in the company to 43.2 million shares as of June 30, from 40.5 million as of March 31. Other blue chips to show gains were Nice, which rose 1.6% to 407.60; Israel Discount Bank, which added 1.3% to 11.89 and Opko Health, which climbed 5.6% to 20.25. Bank shares were higher, with the exception of Mizrahi Tefahot, which dropped 0.3% to 63.89, extending its loss over the last seven sessions to 11%. (Assa Sasson)