Elron Electronic Industries Announces Advanced Stage of Negotiations for Sale of Peach Networks to Microsoft

Strategic Insights -

Elron Electronic Industries Ltd., a multinational high technology holding company, has announced that its subsidiary, Elbit Ltd., is in advanced negotiations with Microsoft for the sale of Peach Networks Ltd. The negotiations are expected to result in a significant gain for Elbit, with a net income after tax estimated at approximately $35 million and a net capital gain of approximately $30 million. Elron, holding approximately 42% interest in Elbit, will record a gain of approximately $12.5 million from the transaction.

Key Takeaways:

  • Elbit Ltd., a subsidiary of Elron Electronic Industries Ltd., is in advanced negotiations with Microsoft for the sale of Peach Networks Ltd.
  • Elbit holds a 57% stake in Peach Networks on a fully diluted basis and will receive a cash payment of approximately $43 million.
  • Elbit's net income after tax from the transaction is estimated at approximately $35 million, with a net capital gain of approximately $30 million.
  • Elron, holding a 42% interest in Elbit, will record a gain of approximately $12.5 million from the transaction.
  • The transaction is expected to close within 30 days of the agreement date, subject to receipt of certain approvals, completion of due diligence, and other terms.
  • Peach Networks is engaged in the development and marketing of interactive TV systems enabling digital cable TV subscribers to access the internet and other services.
  • Elron Electronic Industries Ltd. is a multinational high technology holding company based in Israel, with affiliates operating in defense electronics, communications, semiconductors, networking, software, and information technology.
  • The transaction is subject to risks and uncertainties, and actual results may differ from forward-looking statements due to risk factors discussed in Elron's periodic reports filed with the Securities and Exchange Commission.

Statistics:

  • Elbit holds a $43 million stake in Peach Networks on a fully diluted basis.
  • Net income after tax from the transaction is estimated at approximately $35 million.
  • Net capital gain from the transaction is estimated at approximately $30 million.
  • Elron will record a gain of approximately $12.5 million from the transaction.
  • The parties plan to sign a detailed agreement within one week.
  • The transaction is expected to close within 30 days of the agreement date.

Sources:

  • Business Wire: "Elron Electronic Industries Announces Advanced Stage of Negotiations for Sale of Peach Networks to Microsoft" (Feb. 29, 2000)
  • NASDAQ: ELRNF