A meeting of Aeronautics’ shareholders has approved the agreement for merging the company with a private company fully owned in equal shares by Rafael Advanced Defense Systems and businessperson Avichai Stolero. When the merger is completed, Aeronautics will become a fully-owned subsidiary of the private company, and its shares will be delisted from the Tel Aviv Stock Exchange.
Rafael and Stolero offered to acquire the Yavne-based UAV manufacturer at a company value of NIS 850 million. Aeronautics’ current market cap is NIS 790 million, following a 120% leap in its share price in just three months. At the same time, the current market cap is still 20% lower than the company value in Aeronautics’ IPO in June 2017, which was carried out through an offer for sale.
Aeronautics, led by CEO Amos Mathan, develops, manufactures, and markets unmanned aerial vehicle (UAV) systems, electro-optical systems (through its 50% holding in Controp), and communications systems.
The sale to Rafael and Stolero gives Aaron Frenkel (61) an enormous profit. Frenkel spent the past few months buying up Aeronautics shares, and attained a 31.7% holding in the company. He paid NIS 10 million for 1.4% more of the company’s shares last week.
Frenkel, most of whose business is in real estate and aviation, began accumulating Aeronautics shares last December when the share price was at a low point, after plummeting 60% since the company’s IPO. The share price zoomed 124% following Frenkel’s purchase. Frenkel has spent NIS 170 million to date on Aeronautics’ shares. His holdings now have a market value of NIS 250 million, meaning that he has earned NIS 80 million on his investment on paper.
Aeronautics is controlled by the KCPS, Beresheet, and Viola funds, which jointly hold 36% of the company’s shares, after selling shares for over NIS 400 million in the IPO. Menorah Mivtachim is currently the sole investment institution with a substantial holding in Aeronautics (9.6%).
Aeronautics has had a tumultuous year. The company posted a $1 million operating loss in 2018, compared with a $16 million operating profit in 2017. Revenue was down 5% to $141 million in 2018, and Aeronautics reported a $1.5 million net loss last year, compared with a $5.7 million net profit in 2017.
Published by Globes, Israel business news – en.globes.co.il – on April 4, 2019
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