Defense Ministry freezes $100 million Ondas bid for Iron Dome software firm
Former Rafael executives at US firm Ondas are leading an acquisition push in Israel, including a $100 million bid for Iron Dome software company mPrest, but the Defense Ministry is delaying approval over classified projects.
The Defense Ministry is delaying the acquisition of control by the American holding company Ondas over mPrest, which develops the command-and-control software for the Iron Dome air defense system, Calcalist has learned. Currently, the largest shareholder in mPrest is Rafael, the developer and manufacturer of the Iron Dome. The remaining shares are held by the company’s founder and CEO, Col. (res.) Natan Barak, the OurCrowd fund, and other entities. Ondas is seeking to purchase those shares for about $100 million, at a company valuation of more than $200 million, a move that would leave Rafael as a minority shareholder.
Calcalist has learned that the details of the deal are being examined by the Director of Security of the Defense Establishment, Yuval Shimoni. Concerns have been raised about a foreign company gaining control of mPrest, given its classified activities related to the Iron Dome and other air defense systems. Sources familiar with the matter say the Director of Security of the Defense Establishment’s prolonged review of the deal’s components has delayed progress for several months, with no clear timeline for a decision.
mPrest was founded about 25 years ago by Navy veteran Barak. The company came into prominence about 15 years ago, when the command-and-control software it developed was integrated into Rafael’s Iron Dome system. For its role in the development of Israel’s central air defense system, mPrest received the prestigious Israel Defense Award in 2012.
mPrest’s core activity is in the military sector, and Rafael is considered its primary customer. Since its founding, the company was not offered for sale, until the American company Ondas made an offer to its shareholders at a price that, according to a source involved in the matter, “could not be refused.”
The Defense Ministry’s delay of the Ondas-mPrest deal illustrates a broader lack of coordination, and even conflicting interests, among senior and powerful bodies within the ministry. While Director General Maj. Gen. (res.) Amir Baram and the Head of the Directorate of Defense Research and Development (DDR&D), Danny Gold, have been conveying messages to the market and investors about openness and a desire to increase capital flows into defense companies and the defense-tech sector, other arms of the ministry are citing security difficulties and effectively blocking the realization of that same vision.
“There is no holistic view, and each body within the Defense Ministry is operating from its own narrow perspective, with interests that sometimes clash,” a senior source familiar with the details told Calcalist. According to him, “About a decade ago, investors poured tens of millions of dollars into mPrest, and now they cannot realize their investment due to ‘security considerations.’ Under such conditions, who would want to invest in Israeli defense companies or defense tech? The Defense Ministry cannot hold the stick at both ends. Right now, it is torpedoing the deal out of ignorance.”
A source who supports advancing the deal said it could proceed subject to clear rules, conditions, and safeguards that would fully protect Israel’s security interests. “In the meantime,” he said, “the process is characterized by abnormal slowness and endless bureaucracy. Foreign investors keep asking me how it is possible to work like this.”
Ondas is registered in the United States and traded on Nasdaq. Since the outbreak of the October 7 war, it has aggressively expanded its presence in Israel’s defense market, assembling a portfolio of nine Israeli companies. According to Ondas, it has spent about $400 million so far on acquisitions.
Its most recent purchases were completed last November, when it paid $125 million in cash and another $100 million in shares for Sentrycs, which develops counter-drone interception capabilities, and about $80 million for Roboteam, which focuses on ground-based military robotics. A few weeks earlier, it acquired 4M Defense, which develops advanced mine-clearing technologies using artificial intelligence and robotic systems.
In recent months, Ondas has also acquired Iron Drone, which developed an “anti-drone drone”; Apeiro Motion, which focuses on autonomous ground robotics and drone communications; Insight Intelligent Sensors, which develops AI-based electro-optical sensors for real-time threat detection; and S.P.O., a manufacturer of precision optical components for security applications.
Ondas acquired Airobotics in late 2022 for about $15 million. Even prior to the acquisition, Airobotics had developed autonomous drones and received approval from the U.S. Federal Aviation Administration (FAA) to operate over populated areas. At the time, Ondas already owned American Robotics, and following the deal, Airobotics’ operations were merged into it.
Meir Kliner, one of Airobotics’ founders, became president of Ondas and over the past year has served alongside co-CEO Brig. Gen. (res.) Oshri Lugassy, a former chief of the IDF Combat Engineering Corps. Lugassy previously served as VP of Sales & Marketing at Rafael.
Another market source expressed concern over Ondas’ unusually rapid expansion. “This is how bubbles behave, it’s reminiscent of the SPAC wave at the beginning of the decade,” he told Calcalist. “The name ‘Iron Dome’ is a luxury brand, and Ondas needs it to impress investors in future fundraising rounds and to open doors.”
Against this backdrop, it remains unclear how Rafael, a fully government-owned company, benefits from the Ondas-mPrest deal, if at all. Rafael is mPrest’s primary customer and is expected to remain so even if the Defense Ministry ultimately approves Ondas’ acquisition of control.
At the same time, Ondas is negotiating with Rafael over the possible acquisition of another subsidiary, Controp, which develops electro-optical systems, including cameras for unmanned aerial vehicles. Unlike mPrest, which Rafael never intended to sell, Controp has already been placed on the market. Last summer, Calcalist reported that U.S.-listed AeroVironment was interested in acquiring 50% of Controp at a valuation of $600-700 million. Rafael owns 100% of Aeronautics, which in turn owns 100% of Controp.
Ondas declined to comment. The Defense Ministry said: “Israeli defense exports are increasing, but there will be no compromise on security needs.” Rafael stated that “any negotiations involving the sale of holdings in defense companies require strict regulatory compliance and approvals from the Defense Ministry and the Government Companies Authority. Rafael has always acted accordingly and will continue to do so.”
Even as it advances efforts to acquire two Rafael subsidiaries, Ondas has recruited a growing number of former senior Rafael executives. The company enjoys international prestige due to its defense systems, including Iron Dome, David’s Sling, the Iron Beam high-power laser interceptor recently delivered to the Air Force, and the Windbreaker active protection system for armored vehicles.
Among the former Rafael executives now holding key positions at Ondas is Maj. Gen. (res.) Yoav Har Even, Rafael’s CEO until about two years ago, who serves on Ondas’ advisory committee. Har Even spent roughly eight years at Rafael, a tenure that ended amid controversy following the 2019 deal to acquire the drone company Aeronautics together with businessman Avichai Stolero. Years later, the Government Companies Authority issued a report criticizing the transaction, finding it was economically unviable for Rafael and that Stolero benefited while Rafael bore most of the risk.
Har Even works at Ondas alongside other former Rafael executives, including Dr. Irit Iden, Rafael’s former Executive Vice President for Research and Development, who also advises Ondas, and co-CEO Brig. Gen. (res.) Oshri Lugassy.
Lugassy has become emblematic of Ondas’ acquisition drive in Israel. With deep connections in the IDF and the Defense Ministry, one associate described him as “a permanent fixture in the Kirya, charismatic, persuasive, and a born salesman.”
Even after formally leaving Rafael and before his appointment as co-CEO of Ondas, Lugassy continued to frequent Rafael’s offices as an external consultant. During his tenure, he was highly regarded by Har Even and by Yoav Turgeman, who later succeeded Har Even as CEO.
Calcalist has learned that Ondas’ recruitment of Rafael veterans is ongoing. Efrat Lazari, until recently chief of staff to Rafael Chairman Yuval Steinitz, is expected to join Ondas shortly as VP for Strategic Affairs. Ondas is also reportedly seeking to recruit former executives from other defense companies, regardless of whether it has expressed acquisition interest in those firms.
Regarding Lugassy’s continued advisory role after formally leaving Rafael, the company said: “Following the conclusion of his role in December 2023 and due to the intensity of the fighting, Lugassy was asked to continue assisting Rafael on strategic defense matters. His engagement was approved and authorized.”
