The US-based defense company Leonardo DRS said it has acquired Israel’s RADA Electronic Industries in a major defense technology merger.
Under the terms of the deal, RADA will become a wholly-owned Israeli subsidiary of Leonardo DRS and will operate as a business unit within the company.
RADA shareholders will own about 19.5% of the combined company and Leonardo DRS shareholders will hold the remaining 80.5%.
“The transaction represents the first time a major US-based defense company backed by a global defense prime has acquired a significant Israeli defense technology company,” RADA’s CEO, Dov Sella, said in a statement. “This unique transaction will strengthen the Israeli defense industry and set trends and direction for the future.”
The combined company will trade on the Nasdaq exchange and Tel Aviv Stock Exchange under the ticker “DRS.”
The Calcalist business daily put the cost of the deal at around $670 million.
The two companies had a combined revenue of $2.7 billion in 2021, with adjusted earnings of $305 million.
The merger deal is expected to close in the fourth quarter of 2022.
RADA is based in Netanya and produces small-form tactical radars. It trades on the Nasdaq exchange with a market cap of around $543 million.
Leonardo DRS is a Virginia-based mid-tier defense technology firm owned by an Italian defense group.
The combined company will be better able to provide air defense, anti-drone technology and vehicle protection solutions, Leonardo DRS said.
William J. Lynn III, CEO of Leonardo DRS, said the war in Ukraine has underscored the need for protection against drone attacks and “highlighted the need for modern, capable force protection systems.”
“Not only is this accelerating US purchases of these systems, but it is moving European countries, which are considerably behind in this area, to acquire more critical force protection assets. The combination of RADA and Leonardo DRS will open international market opportunities,” Lynn said in a statement.
The merger will be particularly helpful in addressing short-range air defense, drone threats, rockets, artillery and mortars, and providing vehicle protection systems, he said.