Leonardo’s US electronics business DRS has entered into an all-stock merger with Israel’s RAD Electronic Industries, the two companies said in a joint announcement this week.
Leonardo DRS is set to acquire 100 percent of the share capital in RADA in exchange for approximately 19.5 percent equity ownership to RADA shareholders in the Combined Company. Leonardo DRS will acquire the entirety of RADA’s tactical radar equipment for about $670 million, according to a report from Calcalist.
The combined company will maintain Leonardo DRS as its name and is expected to trade on NASDAQ and TASE under the ticker ‘DRS’.
The transaction is expected to close in the fourth quarter of 2022, at which point RADA will become a wholly-owned subsidiary of Leonardo DRS. Leonardo DRS stands to become a market leader in advanced sensing and force protection in the several rapid growing segments of the U.S. and international defense markets.
The combined company is expected to generate considerable growth from a broad spectrum of new and high-growth markets, further improving the future battlefield for the American military and its allies.
Founded in 1970, RADA is a Netanya-based global defense technology company that primarily develops proprietary radar solutions and avionics systems. The company specialized in mini tactical radars that serve attractive, high-growth markets such as active military protection, C-UAS (counter unmanned aircraft systems), critical infrastructure protection, and border surveillance.
RADA’s unique advanced tactical radars are complementary to Leonardo DRS and are expected to improve its position as an air defense, counter-UAS, and vehicle protection integrator in the force protection market segment.
Merging with Leonardo DRS is expected to significantly bolster RADA’s global competitive positioning and elevate its scale, program diversity, cash generation, and relevant markets, which will, in turn, provide significant growth and value creation opportunities in the future.
“The transaction provides flexibility for the Combined Company to add capabilities in Leonardo DRS’ core markets through targeted acquisitions and strategic investments as we expect to supplement strong organic growth with M&A and dividend distributions as part of our overall strategy going forward,” said William J. Lynn III, CEO of Leonardo DRS.
“I could not be prouder of the platform we have built throughout my nearly 20 years with RADA, culminating in this important strategic transaction with Leonardo DRS,” said Dov Sella, CEO of RADA. “The combination of two leading technology-focused defense companies with diversified exposure to key U.S. Department of Defense programs and an international presence creates a true win-win for RADA and Leonardo DRS shareholders.”
The transaction, he said, “represents the first time a major U.-based defense company backed by a global defense prime has acquired a significant Israeli defense technology company. This unique transaction will strengthen the Israeli defense industry and set trends and direction for the future. For RADA specifically, joining forces with Leonardo DRS will significantly increase our competitiveness in the emerging and demanding markets we are addressing, which are dominated by strong and established players. We look forward to working alongside the Leonardo DRS team to continue driving innovation in the advanced sensing and force protection markets, and value creation for our shareholders.”