Elbit Systems Ltd (ESLT)

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Elbit Systems' looking for new acquisition in Israel and abroad
14.3.07 | 15:29 By Nathan Sheva
Speaking at the Elbit Systems press conference today, company chief executive and president Joseph Ackerman admitted that Elisra Electronic Industries had been in worse shape than they'd realized when Elbit Systems bought the company. "But I do not regret the acquisition or the company's value in it," Ackerman stated. "It's a good company."

If Elbit Systems thought the synergy between the two companies would start yielding fruit in two or three years, well - it was wrong, he confessed. "It may take longer. But it will happen."

Elbit Systems bought 70% of Elisra at a company valuation of $100 million from Koor Industries (NYSE: KOR). In a parallel set of moves it acquired the controlling interest in Tadiran Communications (TASE: TDCM) at the end of 2005.

Elisra lost $26 million on revenues of $219 million in 2006, and remains a millstone around Elbit Systems' neck. Despite that weight, Elbit Systems today reported record results for last year.

"There is no reason why Elisra shouldn't be a profitable company. Elisra has the best electronic warfare technologies in the world," Ackerman says.

What it needs is to become more efficient, he explains. "First of all, the company operates on to sites. It should be consolidated on one. Also, the consent of the workers has to be obtained for efficiency steps planned for the company," he describes. More layoffs are in the offing, though not many.

But more orders poured in than ever before last year, Ackerman says, and also, Elbit Systems has already consolidated the three companies of which Elisra consisted into one.

Unlike most Wall Street-listed companies, Elbit Systems doesn't provide guidance for investors. But Ackerman promises that the year 2007 will be better by all parameters. Also, the trend of merger and acquisition will continue, he said: Elbit Systems means to look for a suitable target in Israel, the U.S. or Europe.

At present 40% of Elbit Systems' sales are to the United States, about $600 million a year. The American defense budget is $600 billion a year, which means there's a lot of potential room for Elbit Systems to grow. Sales to Europe, to which the company hardly sold in the past, comprised 15% of sales last year, Ackerman said. Israel is responsible for 27% of its turnover.

Asked whether Elbit Systems might bid if Israel Military Industries is privatized, he commented that the longer the government remains its owner, the more it deteriorates.

http://www.haaretz.com/hasen/spages/837792.html