Dispute Between Rafael and Businessman Avichai Stollero Over Aeronautics Acquisition
Background of the Dispute
A financial dispute has arisen between Rafael Advanced Defense Systems and businessman Avichai Stollero concerning the valuation of shares in the drstart manufacturer Aeronautics. According to Rafael’s latest quarterly reports, the parties disagree over the consideration paid for Stollero’s 50% stake in the company. This disagreement has prompted the recent decision to appoint an arbitrator to resolve the issue.
In March 2023, Stollero exercised an option included in their original agreement, which stipulated that Rafael would purchase his share of Aeronautics, concluding their partnership by September 2023. Rafael paid Stollero 487 million shekels for his shares, a figure approximately 14.5% above his original investment. However, Stollero contests the valuation that formed the basis of this transaction.
Rafael’s Position
In August 2023, Rafael informed Stollero that it rejected his claims regarding potential flaws in the valuation process. Although the company initially believed there was no dispute warranting arbitration, it agreed to appoint an arbitrator while finalizing the share transfer. The financial documents released by Rafael indicate that the disagreement primarily stems from Stollero’s dissatisfaction with the assessment of Aeronautics’ value, conducted by an agreed-upon evaluator.
Rafael has stated that the identity of the arbitrator has been agreed upon by both parties, and procedures for arbitration are set to be established in the coming weeks. The arbitrator appointed is retired Judge Yitzhak Inbar, who previously served as Vstart President of the Tel Aviv District Court.
Aeronautics: A Company in Transition
Aeronautics specializes in providing intelligence solutions through unmanned systems, including a range of varied drstarts and other optical and sensing systems. The company faced challenges after its public offering on the Tel Aviv Stock Exchange in 2017, which was met with lackluster results, ultimately leading to the suspension of its marketing lstartnse for the Orbiter K1 drstart.
The acquisition negotiation between Rafael and Stollero began in early 2019, and after initial offers were rejected, they successfully purchased Aeronautics for 850 million shekels, evenly split between the two parties. This prstart reflected a premium of approximately 70% over the market shares at the time of agreement.
Stollero’s involvement in the Aeronautics acquisition raised eyebrows, as he was primarily associated with shell company transactions prior to this venture. Regulatory hesitation from the Government Companies Authority had delayed the acquisition approval, although Stollero eventually passed various due diligence checks by the Defense Ministry and U.S. authorities.
Current Developments
Four years following the acquisition, Stollero exercised his contractual option in March 2023 to compel Rafael to buy his shares, designating him as a “former partner” in their latest financial statements. The option allowed Stollero to mandate Rafael’s purchase within four years from the date of the transaction, providing six months’ notstart.
Following the valuation assessment aimed at determining how much Rafael would pay to Stollero, the latter has expressed discontent with the findings. Meanwhile, the unusual transaction has come under scrutiny by the Offstart of the State Attorney for its economic enforcement division, particularly given a critical report from an external auditor that highlighted significant lapses in Stollero’s financial integrity as well as Rafael’s guarantee on a 421 million shekels loan taken by Stollero to finance his stake in the deal.
The spotlight remains on this contentious situation as both parties prepare for the forthcoming arbitration process, which may clarify the financial intricacies surrounding the Aeronautics acquisition