Sion Technologies targets over one billion shekels in Tel Aviv listing

Israeli laser manufacturer Sion Technologies is currently in the process of preparing for an initial public offering on the Tel Aviv Stock Exchange. The company aims to value the listing at more than one billion shekels. TheMarker reported the story.

The company began the process of identifying underwriters several weeks ago and has engaged P.O.E.I. Underwriting for the transaction. The ability to proceed with the listing depends on current market conditions. If the stagnation in the defense stock market continues, the offering may be delayed. In contrast, had the company attempted the listing during the peak of the defense sector boom seen a year ago, it might have achieved a significantly higher valuation.

Recent months have seen other defense companies postpone their planned listings due to market conditions. One such example is Weizmann, which considered a New York listing but has since suspended the move. Sion Technologies holds unique technologies in the field of laser manufacturing.

The controlling shareholders of Sion Technologies include founder and chief executive officer Eyal Shaked, who holds 26 percent of the company's shares. The private fund Alah, which manages capital for American investors and is managed by the investment firm Kalanit and Lefler, holds 25 percent of the shares. An additional 23 percent of the shares are held by American investors through the American investment bank First Manhattan Company, while Elbit Systems holds 5 percent.

The controlling shareholders had intended to list the company more than a year ago, driven by the defense boom and growing interest in laser systems. However, a business dispute with Elbit Systems delayed these plans. The dispute arose from a 2015 agreement defining mutual non-competition between Sion Technologies and Elbit's laser subsidiary, Aleof. The agreement stipulated that Sion would not engage in high-power laser products for military use, while Aleof would not compete in high-power laser products for civilian use. Effectively, all marketing of Sion's technology for military purposes was to go through Elbit.

In June, after nine months of legal negotiations, Elbit Systems and Sion Technologies reached a settlement regarding the business dispute. Under the settlement, the volume of royalties paid by Elbit to Sion Technologies for marketing systems based on Sion's technologies increased significantly.

To list, Sion Technologies will need approval from the Security Officer in the Ministry of Defense regarding the areas of its activity that it can disclose. The potential revenue in this sector can be gauged by the fact that the Ministry of Defense paid two billion shekels for the development of Rafael's laser system, Iron Beam, and each laser director costs tens of millions of dollars.