Unmanned aircraft system manufacturing company AeroVironment (Nasdaq: AVAV) has agreed to acquire Arcturus UAV in a cash-and-stock transaction valued at approximately $405M as part of efforts to expand into adjacent segments and broaden UAS portfolio and customer footprint.
AeroVironment said Wednesday it expects to complete the acquisition in the fourth quarter of the company’s 2021 fiscal year and the deal is subject to regulatory approvals and other customary closing conditions.
“We are excited about the opportunities for value creation through our acquisition of Arcturus UAV, which will enable us to accelerate our growth strategy and expand our reach into the more valuable Group 2 and 3 UAS segments,” said Wahid Nawabi, president and CEO of AeroVironment.
Nawabi added that AeroVironment seeks to help clients address a wider set of defense and commercial missions by offering a portfolio of multidomain unmanned platforms, backed by the company’s ongoing investments in autonomy and artificial intelligence.
Petaluma, California-based Arcturus UAV employs 270 workers, builds Group 2 and 3 drones and offers contractor-owned, contractor-operated services. The entity currently supports U.S. Special Operations Command’s Mid-Endurance UAS III and IV programs and the U.S. Army’s Future Tactical UAS program. Its products include T-20, a medium endurance catapult-launched system, and JUMP-20, a medium endurance vertical takeoff and landing platform.
AeroVironment will use existing cash on hand to fund $155M of the purchase price and expects the transaction to be accretive to adjusted earnings before interest, taxes, depreciation and amortization and non-GAAP and GAAP diluted earnings per share in fiscal year 2022.
The company has secured commitments for a $100M revolver and $200M term loan facility. Bank of America served as AeroVironment’s administrative agent, while BofA Securities, U.S. Bank National Association and JPMorgan Chase Bank acted as arrangers.
Jefferies served as AeroVironment’s exclusive financial adviser and K&L Gates advised the company on the transaction’s legal aspect. Evercore and Hogan Lovells served as financial and legal advisers, respectively, to Arcturus UAV.
