AeroVironment, Inc. (NASDAQ:AVAV) shares are trading lower on Tuesday. The company inked into a definitive agreement to acquire BlueHalo in an all-stock transaction valued at approximately $4.1 billion.
As per the deal, AeroVironment will issue approximately 18.5 million shares of AV common stock to BlueHalo.
The acquisition is projected to form a diversified Defense Tech company with a complementary portfolio in Uncrewed Systems, Loitering Munitions, Counter UAS, Space Technologies, Electronic Warfare, and Cyber, all enhanced by AI and Autonomy.
The transaction, unanimously approved by both companies' boards, is expected to close in the first half of calendar 2025, subject to regulatory and AV shareholder approvals, along with other customary closing conditions.
Following the transaction's close, AeroVironment shareholders will hold around 60.5% of the combined company, while BlueHalo's equity holders will own 39.5%, subject to closing adjustments.
Arlington Capital Partners, the majority owner of BlueHalo, will retain a significant stake, with most BlueHalo holders entering lock-up agreements—40% releasing 12 months post-close, and the remaining 60% in equal tranches at 18 and 24 months.
AeroVironment expects BlueHalo's portfolio of 10 flagship solution families and over 100 patents to integrate seamlessly with its own expertise in Uncrewed Systems, Loitering Munitions, and Advanced Technologies.
This synergy will enable the combined company to deliver next-generation technologies, with projected pro forma revenue exceeding $1.7 billion.
BlueHalo expects to achieve over $900 million in revenue for 2024, with a funded backlog nearing $600 million and a strong pipeline of multi-billion-dollar opportunities.
In 2023, BlueHalo generated approximately $886 million in revenue, up from $759 million in 2022 and $660 million in 2021.
AeroVironment expects the transaction to be accretive to revenue, adjusted EBITDA, and non-GAAP EPS in the first full fiscal year after the deal closes.
Following the completion of the transaction, AeroVironment Chairman, President and CEO Wahid Nawabi will be Chairman, President and CEO of the combined company. Jonathan Moneymaker, CEO of BlueHalo, will serve as a strategic advisor to Nawabi and the combined company management team.
Investors can gain exposure to the stock via ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) and ARK Space Exploration & Innovation ETF (BATS:ARKX).
Price Action: AVAV shares are down 3.67% at $188.84 at the last check Tuesday.
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