Indian website “Little About” reports that the Pentagon has forced Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) to withdraw from a $12 billion Indian Ministry of Defense tender for 126 multi-role combat aircraft (MRCA) for the Indian Air Force. IAI was due to collaborate with Sweden’s Saab AB (OMX: SAAB), manufacturer of the JAS-39 Gripen jet fighter.
According to “Little About”, Saab asked the IAI to jointly develop an advanced model, which would compete for the deal. The Israeli Ministry of Defense ordered IAI to back out of the deal after the Pentagon expressed concern that American technology, used by Israel, would be integrated into the Gripen offered to the Indians.
The Pentagon and the Ministry of Defense were in talks for 18 months before the decision was taken a few months ago that IAI would withdraw from the tender.
Although the issue of technology was the official reason that the US gave, however, according to “Little About”, Israeli officials said it was more likely that the Americans were concerned that if the IAI competed for the deal with Saab it would force the US companies to lower their prices. Both Boeing Company (NYSE: BA) and Lockheed Martin Inc. (NYSE: LMC) are competing in the tender.
IAI declined to comment on the report.
Three years ago there was a similar situation. IAI was participating in a $2 billion South Korean AWACS tender. IAI was offering its AWACS Gulfstream G550 platform, while Boeing was offering its Boeing 737 platform, which cost $700 million more. After two years of hard bargaining, IAI lost the tender to Boeing, due to restrictions the US technological and commercial restrictions, which meant that IAI could not meet the Korean’s stipulated terms for the tender.
Published by Globes [online], Israel business news - www.globes-online.com - on July 5, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009