AeroVironment has made a significant move by agreeing to acquire BlueHalo, a space and defense technology company, in an all-stock deal that values the enterprise at $4.1 billion. The acquisition, announced on Tuesday, involves AeroVironment offering 18.5 million common shares to BlueHalo, which is primarily owned by Arlington Capital Partners.
This transaction is anticipated to conclude in the first half of 2025, contingent on regulatory approvals. Post-acquisition, AeroVironment shareholders will control 60.5% of the newly combined entity, while 39.5% will remain with BlueHalo's equity holders. Arlington Capital Partners is expected to retain a significant ownership stake in the merged company.
Despite this positive news, shares of AeroVironment experienced a decline of 2.3% in afternoon trading. "Today we are poised to usher in the next era of defense technology through our combination with BlueHalo," remarked AeroVironment Chief Executive Wahid Nawabi. "Together, we will drive agile innovation and deliver comprehensive, next-generation solutions designed to redefine the future of defense." This merger is anticipated to expand AeroVironment's total addressable market significantly by entering new segments, including counter-UAS, electronic warfare, cyber, and space technologies.
The deal aims to bolster AeroVironment's capabilities to meet the dynamic needs of the Department of Defense and allied nations with a comprehensive suite of innovative solutions. The newly formed company is projected to generate over $1.7 billion in revenue on a pro forma basis. BlueHalo is expecting sales to surpass $900 million this year, a slight increase from $886 million in 2023.
AeroVironment forecasts that the acquisition will positively impact both revenue and adjusted earnings per share in the fiscal year following the transaction's closure. Following the deal's completion, the AeroVironment board will expand to 10 members, including two directors appointed by Arlington Capital Partners.
Wahid Nawabi will continue to lead the merged company, whereas BlueHalo CEO Jonathan Moneymaker will act as a strategic advisor to Nawabi. "We have pioneered solutions for drone warfare, distributed autonomy, and the need for more robust and assured access to space in an increasingly contested, crowded, and competitive domain," stated Moneymaker.
"By uniting with AeroVironment, we are building an organization equipped to meet emerging defense priorities and deliver purpose-driven, state-of-the-art solutions with unmatched speed.".