Israel’s RADA Electronic Industries Ltd and Leonardo DRS Inc have announced that they have entered into a definitive agreement to merge and become a combined public company. Upon closing of the transaction, which is expected in the fourth quarter of 2022, RADA will become a wholly-owned subsidiary of Leonardo DRS. Leonardo DRS is expected to be listed on NASDAQ and TASE under the symbol “DRS.”
According to a RADA press release:
“This transaction is anticipated to strengthen Leonardo DRS into a market leader in advanced sensing and force protection aligned to many of the fastest growing segments of the U.S. and international defense markets. 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….The Combined Company will have positions on critical force protection programs, including its partnership on the Maneuver-Short Range Air Defense (M-SHORAD) and RADA positions on SOCOM SIP (special operations command system integration partner) with Anduril Industries, the USMC GBAD (ground based air defense) and the USAF ABAD (Air Base Air Defense) Programs of Record.
- Leonardo DRS will acquire 100% of the share capital in RADA in exchange for approximately 19.5% equity ownership to RADA shareholders in the Combined Company, which will maintain the name Leonardo DRS and is anticipated to trade on NASDAQ and TASE under the symbol “DRS.”
- Post-closing, RADA will become a wholly-owned Israeli subsidiary of Leonardo DRS and operate as a business unit – including its U.S. subsidiaries – within DRS’s Advanced Sensing and Computing segment.
- The Board of Directors of each of RADA and Leonardo SpA approved the transaction, which is expected to close in the fourth quarter of 2022 (subject to approval of the stockholders of RADA and other closing conditions including the receipt of certain regulatory approvals).
- Transaction is expected to be accretive to RADA earnings per share in year one.
- The 19.5% ownership in the combined company provided to RADA shareholders was designed to provide a premium in excess of 20%.
- The business combination is anticipated to be tax free for RADA and Leonardo DRS shareholders.
- Combined Company had USD2.7 billion of Revenue and USD305 million of Adjusted EBITDA in 2021
- At the end of the first quarter of 2022, Combined Company had pro forma net financial debt of approximately USD197 million and a net financial debt to LTM Adjusted EBITDA ratio of 0.6xAdditional information about the proposed merger, including a copy of the definitive agreement and investor presentation, will be provided in a Report on Form 6-K to be filed by RADA and a Current Report on Form 8-K to be filed by DRS with the SEC and available at www.sec.gov.
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Image: According to information published by the U.S. Army on April 23, 2021, the 5th Battalion, 4th Air Defense Artillery Regiment (5-4 ADA), a subordinate unit under the 10th Army Air and Missile Defense Command has received the first Mobile Short Range Air Defense (M-SHORAD) systems based on Stryker A1 8×8 armored vehicle.The M-SHORAD is also equipped with hemispheric radar (MHR) designed and manufactured by the Israeli company RADA Electronic Industries – Image RADA