Elbit buys state-owned arms maker IMI for NIS 1.8 billion

Elbit buys state-owned arms maker IMI for NIS 1.8 billion

Defense contractor sold to free up space for residential housing in high-demand area, send jobs to the Negev, government says

The front gate of IMI Systems headquarters. (Wikipedia/CC BY)
The front gate of IMI Systems headquarters. (Wikipedia/CC BY)

The government announced on Sunday that it had finalized the details of the sale of one of Israel’s major defense contractors, the state-owned IMI Systems, to Elbit Systems, a major Israeli defense electronics company.

IMI, formerly known as Israel Military Industries, is the maker of iconic Israeli infantry firearms like the Uzi, the Galil assault rifle and the Negev machine gun, as well as much of the IDF ground forces’ ammunition, multiple types of rockets for air and artillery systems, and precision ordnance.

Officials celebrated news of the sale agreement by noting that under the conditions agreed to by Elbit, IMI will shut down its Ramat Hasharon factories and move them to the job-starved Negev. They will reopen in the Ramat Beka industrial zone south of Beersheba.

The move is expected to free up land for the building of thousands of housing units in the Ramat Hasharon area, where demand for apartments is high.

Finance Minister Moshe Kahlon, whose ministry made the announcement Sunday, welcomed the news.

“The agreement that was reached continues the Finance Ministry’s policy of clearing [industry] from high-demand areas for the public benefit,” he said. “The move of the factories to the Negev will allow constructions of thousands of housing units in the heart of a high-demand area, while strengthening industry and employment in the Negev.”

The sale price was set at NIS 1.8 billion ($520 million), with an added NIS 100 million ($29 million) to be paid by Elbit later if IMI reaches specified overseas sales goals in 2018.

According to the business daily The Marker, negotiations were led on the government’s side by Finance Ministry Accountant General Roni Hizkiyahu, as well as officials from the Government Corporations Authority, the Finance Ministry’s Budgets Department, the Defense Ministry and the Israel Lands Authority.

The privatization of IMI was first approved by the cabinet in 2013. Elbit won the government’s tender process for the purchase.

“The defense establishment is the biggest social and political engine in the country, and moving the IMI factories from Ramat Hasharon to Ramat Beka will bring the Negev thousands of jobs and billions in investment,” Defense Minister Avigdor Liberman said.

Calling the negotiations “intensive,” Hizkiyahu said the talks were focused on “protecting the interests of the Defense Ministry, ensuring the continued operation of IMI and strengthening the healthy competition between the defense industries.”

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