Solcon in Collaboration Talks With International Giant

It makes engines and electronic systems, the Israeli company makes soft starters

Industrial systems maker Solcon Industries is in negotiations to collaborate with one of the world's leading electrical systems and electronics corporations, says Marathon Investments, which owns the 68% controlling interest in Solcon.

The potential ally makes mainly power generators and engines, Marathon said. One of Solcon's areas of expertise is soft starters for giant engines.

Marathon bought its 68% controlling interest in Solcon just last month, paying NIS 88 million. The deal represented a company value of NIS 130 million for Solcon.

The deal taking shape would be in two phases, Marathon explains. At first Solcon would sell the international company a "product portfolio" for royalties of 15%, but no less than $4.5 million from 2008 to 2010. Afterwards Solcon would get 3% of the product price as royalties, or no less than $390,000 a year.

Since Solcon does not expect to incur any costs on the products, most of the payments from the ally would translate into income.

At the second phase, Solcon and the ally would establish a joint company in which Solcon would own the minority 49% interest.