Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) is responding to the success in Brazil of its rival Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) by also establishing a joint venture with Brazilian conglomerate Synergy Group to develop and produce unmanned aerial vehicles (UAV).
At the 2011 LAAD Latin American Aerospace & Defense Exhibition in Rio de Janeiro last week, IAI CEO Itzhak Nissan signed a cooperation agreement with Synergy Group subsidiary Synergy Defense. At LAAD, Elbit Systems' Brazilian subsidiary Sistemas SA and Brazilian aerospace company Embraer SA (NYSE: ERJ; Bovespa: BR3) signed an agreement to establish a joint venture to develop UAV's for the Brazilian and Latin American markets.
As part of IAI's effort to establish operations in Brazil in response to Elbit Systems' flourishing operations there, Nissan met Synergy Group CEO Germán Efromovich. They agreed that IAI representatives will go to Brazil to examine the potential of the UAV market ahead of the establishment of the joint venture, which will participate in defense tenders.
The 2014 World Cup and 2016 Rio de Janeiro Olympic Games will greatly expand Brazil's need for state-of-the-art homeland security products - a field in which Israeli companies are global leaders.
Sources at IAI said that, as part of the ties with Synergy Group, IAI would try to replicate in Brazil its business model used in other countries, such as Russia, and the US: IAI will deliver UAV kits produced in Israel, which will be assembled in the partner country until the development of production lines there.
In January, IAI signed a contract to delivery several Heron UAV systems to Brazil's Federal Police. Federal Police officers are currently undergoing operational training for the UAVs.
Sources at IAI said the agreement with Synergy Group could lead to collaboration in shipbuilding, aircraft upgrades, and the conversion of passenger planes at IAI's Bedek plant in Israel.
Published by Globes [online], Israel business news - www.globes-online.com - on April 21, 2011
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