Subscribe to our free daily newsletters
. Military Space News .

Subscribe to our free daily newsletters

Israeli defense merger gets green light

by Staff Writers
Tel Aviv, Israel (UPI) Jan 25, 2011
Israeli government ministers and labor leaders have recommended a merger between state-owned Israel Military Industries and Rafael Advanced Defense Systems in a major shake-up in Israel's high-tech defense industry.

The move, if approved by the government, could affect Israel's drive to build a protective shield of missile systems designed to counter a massive bombardment of missiles and rockets that the country's military planners anticipate in any major hostilities that erupt with Iran, Syria and their proxies Hezbollah in Lebanon and Hamas in the Palestinian-ruled Gaza Strip.

Israel Aerospace Industries, the flagship of Israel's defense industry, is worried that the move could jeopardize development of its Arrow-3 anti-ballistic missile system for which IMI provides the powerful motors.

IAI, the nation's leading missile manufacturer, is also concerned about greater competition from Rafael, a key rival if it does take over IMI.

This concern stems particularly from major advances by Rafael in missile development and manufacturing in recent years, such as the Iron Dome and David's Sling systems.

Iron Dome, which is yet to become operational, is designed to shoot down short-range missiles and rockets.

David's Sling, still under development and not expected to be operational until 2012 at the earliest, is intended to counter medium-range missiles and rockets.

Arrow-3 is the long-range, high-altitude component in a planned three-tier missile defense system to protect the Jewish state from unprecedented mass missile attacks.

The decision to green-light an IMI-Rafael merger was made last Thursday by Finance Minister Yuval Steinitz, Defense Minister Ehud Barak and Ofer Eini, chairman of the Histadrut, Israel's General Federation of Labor.

The proposal, which was also supported by IMI's union representatives, must be approved by the Cabinet headed by Prime Minister Binyamin Netanyahu.

Further meetings are scheduled with top executives of IAI, IMI and Rafael in the meantime.

IMI's future has hung in the balance for many months because of a financial crisis brought on by its poor performance compared to other state-owned defense enterprises.

The Finance Ministry initially proposed privatizing IMI. The company's executives, as well as its unions and the Defense Ministry, opposed that. The Finance Ministry retaliated by withholding financial guarantees for foreign contracts from the company.

The firm has also been incensed by the bleak forecasts about the company issued by the Government Companies Authority.

The privatization plan came to nothing and the government instead looked to possible mergers with IAI or Rafael.

IAI, currently ranked the 30th largest defense company in the world, has long envisioned a new state-owned defense conglomerate with itself as the leading component.

It claims that would be better able to compete in foreign markets than the defense industry is now.

Israel's leading privately owned defense contractor, Elbit Systems, has also shown strong interest in acquiring IMI.

The Globes business daily quoted Finance Ministry officials as saying that despite the despite the recommendation to merge IMI with Rafael, the government-labor team was "still open to listening to IAI and to reviewing its position on the merger plan."

IAI's concerns about an IMI-Rafael tie-up stem mainly from the impact it would have on IAI's missile development plans.

Apart from the Arrow program -- the latest variant is designed to shoot down Iranian ballistic missiles outside Earth's atmosphere -- IAI also manufactures various versions of the Barak surface-to-air missile designed to protect warships and strategic land installations.

IMI supplied the power plants for these missile systems from its Givon factory.

IAI's Missile and Space Division "is concerned that Rafael, as IMI's new owner, will raise the prices for the motors for a range of missiles, which could intensify the already tense relationship between the two government-owned defense companies," Globes reported.

"The long-standing, close IAI-IMI relationship over missile motor manufacturing was one of IAI's arguments in recent weeks about taking over IMI …

"If IMI is ultimately merged with Rafael, IAI will have to work out a reasonable arrangement to ensure continued manufacturing of motors for its missiles," Globes observed.

Share This Article With Planet Earth DiggDigg RedditReddit
YahooMyWebYahooMyWeb GoogleGoogle FacebookFacebook

Related Links
The Military Industrial Complex at
Learn about the Superpowers of the 21st Century at

Memory Foam Mattress Review
Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

India sets deadline for jet contract
New Delhi (UPI) Jan 25, 2011
India's defense minister has suggested that New Delhi may award a $10 billion contract for medium multi-role combat aircraft by the end of the year. M.M. Pallam Raju, minister of state for defense, said the bidding could be decided by December. His remarks came on the sidelines of a conference of industrialist in India. "I am hopeful of awarding it by the end of this year," Raju ... read more

NATO, Russia vow unity on terrorism, disagree on shield

NATO, Russia meet at odds over missile shield

STSS Demonstration Satellites Complete On-Orbit Calibration, Ready For BMDS Tests

Romania wants to finalize talks on US missile shield in 2011

Raytheon nabs $145 million deal in Kuwait

Kuwait Awards Contract To Raytheon For Patriot GEM-T Missiles

LockMart Receives Contract For Long Range Anti-Ship Missile Demonstrations

S. Korea, U.S in talks over missiles

New US drone spy cameras fail Air Force test: study

Three US drone strikes kill 13 in Pakistan

Gray Eagle UAS Program Expanding

Israel to sell Brazil air force drones

Boeing Tests New Ka-band SATCOM Antenna System

Raytheon to supply radios to Aussie army

RAF Begin Training With US On Intelligence Aircraft

Joint STARS Successfully Supports JSuW JCTD

For US soldiers, a healthy food revolution

US troops revamp training for foggy battlefields

AMF JTRS Team Demonstrates JTRS Onboard AH-64D Apache Helicopter

Long-Range Radar Program Moving Forward

Germany to sell A400M planes to cut costs

Scrapping Nimrod planes 'puts Britain at risk'

US senator demands probe of tanker mix-up

Gates blames Congress for defense budget 'crisis'

Obama faces tough diplomacy ahead of tour

Gates heads to Canada for talks on war, weapons

US Republicans push UN overhaul

France rallies China, Russia for G20 reform drive

'Air laser' could find bombs at a distance

ONR Achieves Milestone In Free Electron Laser Program

US Office Of Naval Research Achieves Milestone

Navy test fires electromagnetic cannon

The content herein, unless otherwise known to be public domain, are Copyright 1995-2010 - SpaceDaily. AFP and UPI Wire Stories are copyright Agence France-Presse and United Press International. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by SpaceDaily on any Web page published or hosted by SpaceDaily. Privacy Statement