Leonardo’s Bold Leap: Merging Forces with RADA in the Expanding Defense Sector

Leonardo declared today that its American subsidiary Leonardo DRS and RADA Electronic Industries Ltd. have entered into a conclusive agreement to establish a newly merged public entity.

RADA Electronic Industries Ltd. (NASDAQ: RADA, TASE: RADA) (“RADA”) is a prominent provider of cutting-edge software-defined military tactical radars. The firm is a frontrunner in mini-tactical radars, catering to appealing, high-growth sectors, including critical infrastructure safeguarding, border monitoring, active military defense, and counter-drone initiatives. RADA is publicly traded on the NASDAQ and Tel Aviv stock exchanges.

Alessandro Profumo, CEO of Leonardo, remarked: “We are thrilled to announce this significant strategic initiative by Leonardo in the rapidly expanding force protection sector, which lies at the heart of both current and future defense markets. There is an excellent alignment between our US subsidiary Leonardo DRS and RADA: strategically, commercially, and financially. As previously committed, we have concentrated the Leonardo DRS portfolio, and we are now enhancing DRS with RADA in essential strategic areas, fostering growth, further margin enhancement, and new opportunities within the broader Leonardo Group. We have consented to an all-stock merger arrangement, also capitalizing on the chance of listing DRS in the present context of fluctuating markets, thus fulfilling our commitments made last year.”

In recent times, Leonardo has effectively strengthened Leonardo DRS’s competitive positioning, fulfilling its commitments, and centering it on its core business, through the previously disclosed divestiture of GES and AAC, and now taking a pivotal strategic leap forward, by merging with RADA, incorporating a robust enterprise in active defense solutions.

Leonardo DRS and RADA together are projected to generate robust growth fueled by their competitive product offerings addressing the primary requirements of their clientele.

“The unification of RADA’s tactical radar proficiencies and Leonardo DRS’ stature as a premier mid-tier defense supplier establishes the combined entity as a leader in the swiftly evolving force protection sector, enhances our available market, broadens international prospects, and ultimately creates value for shareholders,” stated William J. Lynn III, CEO of Leonardo DRS.

RADA is also an ideal match within Leonardo Group, as it delivers an improved value proposition with its advanced tactical radars that complement Leonardo’s sensor array, fostering a stronger stance and cohesive strategy in emerging fields within the tactical operating landscape. It additionally contributes a local presence in Israel and bolsters the international market development for Leonardo while allowing RADA to tap into opportunities in European and export markets and initiatives, leveraging Leonardo’s worldwide presence.

Leonardo DRS will acquire 100% of RADA’s equity capital in exchange for 19.5% equity stake to RADA shareholders in Leonardo DRS, with Leonardo retaining 80.5% in Leonardo DRS via its American subsidiary Leonardo US Holding (subject to the approval of RADA’s stockholders and other closing requirements including the attainment of specific regulatory clearances).

Upon completion of the transaction, anticipated in the fourth quarter of 2022, Leonardo DRS is expected to be listed on NASDAQ and TASE under the new ticker symbol “DRS.”