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Cabinet approves IMI break-up

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midastouch017   Tuesday, 03/06/07 08:31:07 AM
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Cabinet approves IMI break-up
IMI munitions and land systems Slavin divisions will be privatized and the Givon advanced systems and Maltam Rocket System divisions will be merged with Rafael.
Amnon Barzilai 6 Mar 07 14:34
The cabinet today approved the break-up of Israel Military Industries Ltd. (IMI) by merging two of its units with Rafael Armament Development Authority Ltd. or Israel Aerospace Industries Ltd. (IAI), and the privatization of its core businesses: the munitions division and Slavin land systems division. 12 ministers voted in favor, including Prime Minister Ehud Olmert, and two opposed: Minister of Defense Amir Peretz and Minister of National Infrastructures Benjamin Ben-Eliezer.
The cabinet earlier voted down a proposal by Peretz to merge IMI with either Rafael or IAI. The vote was 11:9. The decision to break up IMI and privatize its core business is a victory for Minister of Finance Abraham Hirchson, who led the measure with the backing of Olmert.

Today’s vote reaffirmed a cabinet vote to privatize IMI in two stages made in August 2005. Under that decision, the IMI Givon advanced systems division and Maltam Rocket System Division will be merged with Rafael, followed by the privatization of the munitions and Slavin division.

When Peretz became minister of defense, he said that the decision was not valid because it had been taken by the previous government.

The decision to break up IMI in two stages is based on a plan prepared several years ago by Ministry of Defense economics advisor David Vaish. The Vaish committee concluded that there was little chance of IMI becoming profitable, in contrast to the other government defense companies, Rafael and IAI. Then-Ministry of Defense director general Amos Yaron supported merging IMI’s munitions and Slavin divisions with Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT).

Published by Globes [online], Israel business news - www.globes.co.il - on March 6, 2007



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