Israeli defence electronics company Elbit Systems and investment company Koor Industries have won approval from their boards for a deal that will lead to Elbit purchasing Koor's 32% shareholding in military communications manufacturer Tadiran Communications, which is part of Elisra Defence.

Koor Industries will in turn acquire a 9.8% stake in Elbit Systems from Federmann Enterprises as part of the deal agreed at the end of December last year.

The restructured group of defence electronics companies is set to become Israel's major private defence organisation, with a turnover of $1.6 billion, competing mainly with Israel Aircraft Industries (IAI).

IAI purchased 30% of Elisra's shares in 2002. Israel's anti-trust authorities are expected to demand the sale of these shares.

IAI is reluctant to sell the shares, but industry sources say that the Israeli ministry of defence, which has given the consolidation of the sector its blessing, will force it to sell them.

Source: Flight International