- Elbit will pay about $50 million to Odebrecht’s defense unit
- Odebrecht has announced a freeze on new investments in Brazil
Israel’s Elbit Systems Ltd., a defense company known for making drones and avionics systems, is close to buying some assets from Odebrecht Defesa & Tecnologia in Brazil, according to two people familiar with the matter.
The assets are valued at about $50 million, said the people, who asked not to be identified because the information isn’t public. The assets are part of Odebrecht Defesa & Tecnologia’s Mectron unit, which develops and manufactures high-tech products and systems for military and civilian uses.
AEL Sistemas, Elbit’s Brazilian subsidiary, declined to comment. Odebrecht Defesa & Tecnologia’s press office said the company is in negotiations with several international companies involving its Mectron unit, but it will remain in the defense sector.
The Odebrecht SA unit known as ODT has seen revenue drop after the government cut spending on its nuclear-submarine program by half as policy makers work to tamp down a widening budget deficit amid the country’s worst recession in a century. The parent company, Latin America’s largest construction conglomerate, announced a freeze on new investments in Brazil last year as a credit crunch tightened access to financing after then-Chief Executive Officer Marcelo Odebrecht was arrested in June 2015 as part of Brazil’s biggest-ever corruption scandal. The CEO stepped down from his position to focus on his defense and remains in jail. He has denied any wrongdoing.
Elbit, which got about 11 percent of its revenue from Latin America last year, has won contracts in Brazil as the government shifts capabilities away from conventional warfare to surveillance and protection of infrastructure and natural resources, particularly in the Amazon and oil-rich offshore regions.