Elbit, Elron and MSFT: Rumors are true
Editorial Staff 2/29/2000 14:00
Elron Electronic Industries Ltd. (NASDAQ: ELRNF) has announced that Elbit Ltd. (Nasdaq: ELBTF), in which Elron holds approximately 42% interest, is in an advanced stage of negotiations with Microsoft for the sale of the entire share capital of Peach Networks Ltd. to Microsoft. Elbit holds about 57% of Peach, on a fully diluted basis, for which it will receive a cash payment of approximately $43 million. Elbit's net income after tax from the transaction, if completed, is estimated at approximately $35 million and Elbit will record a net capital gain of approximately $30 million. Elron will record a gain of approximately $12.5 million from the transaction, if completed.
The parties plan to sign a detailed agreement within one week and the transaction is expected to close within 30 days of the date of signature of the agreement, subject to receipt of certain approvals from the authorities, completion of due diligence and other terms to be set out in the agreement.
Peach is engaged in the development and marketing of systems enabling digital cable TV subscribers to operate interactive services, such as Internet and computer games, on their TV screens.
Meanwhile, MSN Israel, Internet Gold's joint venture with Microsoft, will launch its public beta site later this week with over 20 leading local content partners. This joint venture, 50.1% owned by Internet Gold (Nasdaq: IGLD)and 49.9% by Microsoft Corp. USA, is expected to gain leadership in the Israeli market for interactive content and e-Advertising, where MSN is (and expected to remain for the near future) the sole major international content player. The service will provide a Hebrew language web search engine and chat rooms, as well as e-business and e-commerce services.
Seems to us that there is a natural fit here between what the MSFT joint venture with IGLD does and Peach Networks.
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