Panasonic Corporation (TSE: 6752; NYSE: PC) has acquired the business of Starling Advanced Communications Ltd. (TASE:STLG) for $11 million, eight years after the company was founded. Starling will remain as a stock market shell.
Starling, controlled by Rafael Advanced Defense Systems Ltd. and IDB Holding Corp. Ltd. (TASE:IDBH) investment arm Elron Electronic Industries Ltd. (Pink Sheets: ELRNF; TASE: ELRN), manufactures satellite broadband data communications antennas. The company signed several contracts, but no large ones, and lost $60 million.
Despite the losses, IDB, controlled by chairman Nochi Dankber, continued to support Starling and promised to pay the NIS 20 million owed to its bondholders in full. Starling's IPO in 2007 was successful, partly because of the in-house support it received from the underwriter, Clal Finance Ltd., another IDB company.
At its peak, Starling had 30 employees at its Yokne'am offices, and with a little bit of luke, it might have made it. The company was collaborating with Boeing Company (NYSE: BA) on the latter's satellite antenna project. But the project was cancelled in 2005 by a new CEO, rendering Starling without a major customer.
Starling's hopes of finding an alternative to Boeing never materialized. Worse, a US company developed an air-ground communications network, which it has sold to most US airlines, rendering Starling without customers - and the few customers it had were dissatisfied. Last month, an Asian customer threatened a $6 million lawsuit against the company.
Despite Starling's failure and heavy losses it has caused Elron (including exposure to tens of millions of shekels for Starling's loans), Elron chairman Arie Mientkavich was awarded fat bonuses. The inflated salary scandal spread to Starling, whose executives received very high pay, sometimes only for part-time jobs. Starling chairman Shimon Eckhouse was paid NIS 360,000 a year for working one day a week, and in August, CEO Yitzhak Livni received a NIS 550,000 bonus two weeks before leaving the company.
Starling's share price was unchanged at NIS 0.60 by midday, giving a market cap of NIS 6.4 million.
Published by Globes [online], Israel business news - www.globes-online.com - on October 6, 2011
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