Redwire Expands Defense Reach with $925M Edge Autonomy Purchase

Key Takeaways

Redwire is acquiring Edge Autonomy for $925 million to expand its defense technology capabilities.
The acquisition includes a mix of $150 million in cash and $775 million in stock, expected to finalize by Q2 2024.
Edge Autonomy enhances Redwire’s offerings with advanced drone technology and potential connectivity with low-Earth orbit satellites.

Expansion of Defense Technology Portfolio

Redwire, a space company founded in 2020, is set to acquire unmanned aerial system maker Edge Autonomy in a $925 million deal. The acquisition aims to diversify Redwire’s portfolio within the defense technology sector, complementing its existing space infrastructure focus. Edge Autonomy’s drones have played a role in military operations, notably in Ukraine’s defense efforts.

Headquartered in Jacksonville, Florida, Redwire will pay $150 million in cash and $775 million in stock, with expectations to close the deal in the second quarter of 2024, subject to shareholder and regulatory approvals. CEO Pete Cannito highlighted that Edge Autonomy’s tactical drones, known as Group 2 UAS or small UAS, are typically operated by one or two users on the ground.

The integration of Edge Autonomy will bring innovations in edge computing and artificial intelligence, enhancing real-time data processing, autonomous operations, and swarm capabilities. The company has focused on improving drone battery life, enabling potential expansion into Group 3 missions which involve larger drones.

Cannito explained that as smaller drones take on longer missions, advanced communication tools, including satellites, become crucial. He emphasized that utilizing satellites for command and control can significantly enhance operational efficiency and broaden mission capabilities. With Edge Autonomy, Redwire envisions using its low-Earth orbit satellites to facilitate multi-domain connectivity, integrating drone and space technologies for enhanced military operations.

Since its inception, Redwire has actively pursued acquisitions to solidify its position in the defense sector. With this deal, Redwire anticipates combined revenues in the range of $535 million to $605 million this year and a merged workforce of about 1,300 employees. The projected profit following the merger is estimated at $70 million to $105 million.

The private equity firm AE Industrial Partners, which also supports Edge Autonomy, holds 73% of Redwire’s voting shares and is backing the transaction. The deal requires approval from a majority of the voting shares not held by AEI. Following the acquisition, AEI will have the ability to appoint four directors to Redwire’s board, a number that may change if AEI’s ownership falls below 50%. Edge Autonomy’s backers will be entitled to appoint one director while holding at least 25% of the stock.

Advisors for the transaction include J.P. Morgan Securities and GH Partners for Redwire, with Roth Capital Partners aiding a special committee of Redwire’s board. For Edge Autonomy, Citi serves as the financial adviser, supported by Kirkland & Ellis as its legal adviser.

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