Elbit Systems Buys Out IMI Systems
Elbit Systems has completed a deal to buy its rival IMI Systems Ltd (formerly Israeli Military Industries) in a deal worth nearly half a billion dollars. Elbit Systems’s acquisition of the government owned defence contractor marks the end of the protracted privatisation of IMI.
IMI was originally founded back in 1933, before the state of Israel even existed, and has a long history of weapons manufacture. IMI now describe themselves as a defence solutions developer but still manufacture a large range of small arms and artillery ammunition. In 2005 IMI’s small arms division, responsible for developing weapons like the Uzi, the Galil and the Negev LMG, was sold off and renamed Israel Weapon Industries (IWI).
Israel’s president, Benjamin Netanyahu, welcomed the deal:
Today we are at the end of a long and important process that began several years ago. The sale of IMI to Elbit will facilitate the advancement of the Israeli defence industry, will leverage Israel’s technological abilities, and will increase defence exports. All of these will directly contribute to the Israeli economy.
Bezhalel Machlis, president and CEO of Elbit Systems said of the deal:
The synergy between the capabilities of the two companies and the global positioning of Elbit Systems will enable us to offer an enhanced portfolio and to realize the potential of the technologies of IMI in the international arena, making this acquisition significant to our long-term growth strategy. Elbit Systems has a proven track record of successfully performing major acquisitions, and I am convinced that this acquisition will be beneficial for Israel’s economy, for both companies’ employees and customers and for our shareholders.
The privatisation process for the rest of the company began in 2013. The deal is worth 1.8 billion Israeli shekel or $495 million, with an additional conditional payment of 100 million Israeli shekels or $27 million contingent upon IMI meeting agreed performance goals.
Managing Editor: TheFirearmBlog.com & Overt Defense.com. Matt is a British historian specialising in small arms development and military history. He has written several books and for a variety of publications in both the US and UK. Matt is also runs The Armourer's Bench, a video series on historically significant small arms. Here on TFB he covers product and current military small arms news. Reach Matt at: matt@thefirearmblog.com
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This doesn't look too good to me. IMI was founded on the premise that sound national defense requires a domestic production of defense consumables that should be exempt of profit considerations. Yes, you got it, that's Socialism, and IMI was known as a bottomless pit for public funds which could not cover the wages of its expansive workforce with its meager export earnings, mainly from Third World dictatorships with dubious human rights records.
There is, however, some hope that this will not be a buy-and-bury takeover since IMI's and Elbit's product ranges are not overlapping but rather complementary, and that maybe some of the families who depend on IMI salaries will not need to beg the notoriously harsh and cruel Israeli Social Security system for a living.
When IMI's financially unsound small arms division was sold to the SK Group for a pittance to become the rather successful and profitable IWI Ltd., it goes without saying that the People of Israel, the nominal former owner, did not see a nickel from this money, and the same goes for the sale of the larger IMI industrial complex.
Hopefully there will be an inquest into these dealings some day, and at least the People will get to find out into whose pockets these monies went...
I missed something...Did they privatize and that was not successful and the government bought them? Or was it a gov't entity and Elbit is private? I understand the split; IMI vs. IWI, I think....