Ministers are expected at their next meeting to approve a consolidation plan from the Government Companies Authority to merge three state-owned companies with three others, in a move presented as a way to cut bureaucracy and save public money. The main mergers are Elta Systems into its parent Israel Aerospace Industries, Cities into Dira Lehashkir, and Cross Israel into Netivei Ayalon.
The most significant case is Elta and Israel Aerospace Industries. Elta, which develops and makes radar systems for Israel’s air-defense layers, including Arrow 3, Iron Dome and David’s Sling, employs 4,700 people, almost a third of IAI’s workforce. In 2025 it recorded sales of about $2.2 billion and generated 24% of IAI’s revenue, after the parent company posted about $7.5 billion in revenue last year. Under the plan, Elta would stop operating as a subsidiary and become one of IAI’s four main divisions. The authority says this would remove the need for a separate board, merge finance, treasury and human-resources functions, and make dividend collection from the state-owned company easier. Elta’s CEO, Dror Bar, would not see any change in authority or employment terms.
Another merger would combine Cross Israel, the operator of Route 6, with Netivei Ayalon. The authority says Cross Israel’s activity has fallen sharply since the highway construction work ended more than three decades after the company was founded. Netivei Ayalon handled about 3 billion shekels in activity in 2025 in urban transport projects, and the authority estimates annual savings of about 80 million shekels. It also says Cross Israel has the highest management-expense ratio among similarly sized firms, with management costs of 86 million shekels in 2025 and 76 million in 2024.
A third merger would fold Cities, founded more than 50 years ago to serve the Housing and Construction Ministry, into Dira Lehashkir, created in 2013 to promote housing supply. The authority believes this would create a smoother chain from infrastructure and land development through planning, initiation and residential construction management, though both companies are small and the financial savings are expected to be limited. The plan presented to ministers does not include other merger projects still under review, including Ktzaa with Taas, and Nezer HaSharon with the Society for the Protection of Nature, which depends on an agreement with the Defense Ministry over security clearance requirements for polluted-site cleanup.
