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June 22, 2022

Leonardo DRS and RADA sign agreement for merger

The deal is expected to be completed in the fourth quarter of this year.

Leonardo’s US subsidiary Leonardo DRS and Israel-based RADA Electronic Industries have signed a definitive agreement for a merger to become a combined public company.

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The merger is expected to turn the combined entity into a market leader in advanced sensing and force protection.

The deal is expected to be completed in the fourth quarter of this year.

Following the deal closure, RADA will become a wholly owned Israeli subsidiary of Leonardo DRS, which is expected to be listed on the NASDAQ and Tel Aviv Stock Exchange.

Including its US subsidiaries, RADA will operate as a business unit within DRS’s Advanced Sensing and Computing segment.

RADA’s advanced tactical radars complement Leonardo DRS’s solutions and are expected to improve the latter’s position in the force protection market segment as an air defence, counter-UAS, and vehicle protection integrator.

For RADA, the merger with Leonardo DRS is expected to improve its competitive positioning in the global market and boost its scale, programme diversity, and cash generation.

Leonardo DRS will buy 100% of the share capital in RADA in return for approximately 19.5% equity ownership to RADA shareholders in the merged entity.

The merged firm will carry the name of Leonardo DRS.

The board of directors of both RADA and Leonardo gave approval for the deal.

In 2021, the combined firm had a revenue of $2.7bn and an adjusted EBITDA of $305m.

Leonardo DRS CEO William J Lynn III said, “The transaction provides flexibility for the combined company to add capabilities in Leonardo DRS’ core markets through targeted acquisitions and strategic investments as we expect to supplement strong organic growth with M&A and dividend distributions as part of our overall strategy going forward.”

RADA CEO Dov Sella said, “The combination of two leading technology-focused defence companies with diversified exposure to key US Department of Defence programmes and an international presence creates a true win-win for RADA and Leonardo DRS shareholders.”

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