Israeli defense tech firm Rafael is in advanced talks to sell 50% of its shares in its subsidiary Controp.

US-based defense firm AeroVironment has emerged as the main bidder.

The potential deal values Controp at between US$600 million and US$700 million, though Rafael is seeking a higher valuation.

Rothschild & Co. is advising on the sale, which would reduce Rafael’s stake and remove Controp from the status of a government-owned company.

Controp, which develops electro-optical and precision motion systems for defense use, reported US$150 million in revenue and US$8 million in net profit for 2024, both up year-on-year.

The company is also planning to list its subsidiary MicroCon Vision on the Tel Aviv Stock Exchange at a valuation of 300 million shekels (US$88.8 million) to 400 million shekels (US$118.5 million).

AeroVironment, headquartered in Virginia, reported US$820 million in revenue and US$43 million in net profit for the year ending April 2025.

Rafael confirmed it is seeking a partner for Controp.

🔗 Source: Calcalist

🧠 Food for thought

1️⃣ State ownership constraints drive strategic restructuring in defense sector

Controp’s planned partial divestiture reflects a broader challenge facing government-owned defense companies competing in global markets.

The company explicitly cites limitations in “salaries, stock options and decision-making” as key drivers for reducing Rafael’s stake from 100% to 50%, which would remove its classification as a government company.

This mirrors similar strategic moves in the Israeli defense sector, where companies have divested divisions to focus on core capabilities. For example, Magal Security Systems completed a $35 million divestiture of its Integration Solutions Division to Aeronautics in 2021 to strengthen its balance sheet and growth potential.

The timing appears strategic given Controp’s strong financial performance, with 2024 revenues jumping to $150 million from $115 million the previous year and net profit increasing from $2.5 million to $8 million.

By maintaining exactly 50% ownership, Rafael retains significant control while unlocking operational flexibility that could prove crucial for competing against private defense contractors in international markets.