Radar supplied by RADA to US Army  credit: US Army

Leonardo DRS buys Israeli radar co RADA at 34% premium

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Netanya-based mostly Israeli defense business RADA Electronic Industries Ltd. (TASE: RADA Nasdaq: RADA), which produces tactical radar methods, is merging with US business Leonardo DRS Inc. The stock-dependent transaction will end result in RADA’s present shareholders holding 19.5% of the merged organization. The deal is predicted to near in the fourth quarter of this calendar year. RADA will turn out to be a wholly-owned subsidiary of Leonardo DRS, which will be outlined on Nasdaq and on the Tel Aviv Inventory Trade below the symbol DRS. The conditions of the deal signify a 34% top quality in excess of RADA’s closing share price tag yesterday, valuing the business at $775 million.

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The combined company is envisioned to make EBITDA as a percentage of income in the very low double-digits in 2023. The put together corporation experienced $2.7 billion earnings and $305 million modified EBITDA in 2021. At the stop of the very first quarter of 2022, the merged corporation had credit card debt of roughly $197 million.

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RADA is a veteran business that for most of its existence dealt in avionics. More than a ten years back, it entered a new industry, that of advanced application-outlined military tactical radars. The radars are mounted on armed service cars and run on the shift. They as a result supply floor forces with active security, these kinds of as against mortars and attack drones. The company is also nonetheless active in its regular discipline of avionics.

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“RADA and Leonardo DRS are sturdy and complementary technologies companies, and their close historic partnership by collaboration on many systems, has resulted in a deep cultural in shape,” the companies’ announcement reported.

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The announcement also stated that “Leonardo DRS’s mother or father corporation and sole shareholder, Leonardo SpA, is a main world Aerospace and Defense firm. Leonardo SpA’s industry situation will deliver accessibility to a reshaped European defense market place as well as protection marketplaces about the environment, while also setting up a property marketplace in Israel.”

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RADA CEO Dov Sella said, “I could not be prouder of the platform we have crafted all over my virtually 20 yrs with RADA, culminating in this critical strategic transaction with Leonardo DRS. The mixture of two main know-how-centered defense corporations with diversified publicity to essential US Section of Defense systems and an global presence makes a correct acquire-gain for RADA and Leonardo DRS shareholders.

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“The transaction signifies the initial time a major US-primarily based protection company backed by a global protection prime has obtained a substantial Israeli protection technology business. This distinctive transaction will reinforce the Israeli protection field and established traits and course for the foreseeable future.”

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“The conflict in Ukraine has underscored the vulnerability of forces to drone attacks and has highlighted the need for modern day, able force protection devices. Not only is this accelerating US purchases of these programs, but it is transferring European countries, which are noticeably guiding in this location, to receive a lot more essential force defense assets. The blend of RADA and Leonardo DRS will open intercontinental industry possibilities, particularly in brief-vary air protection, counter-UAS, counter rockets, artillery and mortars and auto protection systems,” reported William J. Lynn III, CEO of Leonardo DRS.

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Evercore is serving as exceptional economic advisor to RADA and J.P. Morgan Securities LLC is serving as unique financial advisor to Leonardo DRS. DLA Piper LLP (US) and S. Friedman & Co. are serving as lawful advisors to RADA and Sullivan & Cromwell LLP and Herzog Fox & Neeman are serving as lawful advisors to Leonardo DRS.

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Published by Globes, Israel company news – en.globes.co.il – on June 21, 2022.

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© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

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