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Elbit Systems in Haifa, Israel, has agreed to pay $18 million for a 19% stake in fellow Israeli defense firm Mikal. The Mikal group operates through 3 main divisions: Soltam Systems, which supplies artillery, mortars, and ammunition; Symar, which supplies armored fighting vehicles; and ITL Optronics, which supplies sensors for soldiers, unmanned aerial vehicles, military vehicles and battle management systems.

In the first stage of the transaction, Elbit Systems will loan Mikal $18 million. Once regulatory approvals are received, the loan will be converted to an equity investment, and Mikal will issue approximately 19% of its shares to Elbit Systems. Then, Elbit Systems will be granted the option to purchase the remaining shares of Mikal from the other shareholders during 2011 for a purchase price to be determined through an independent external valuation. The Mikal Group is Israel’s second largest privately owned defense conglomerate, consisting of 19 globally-distributed companies focusing on land-based solutions, systems and products for over 80 countries worldwide.