AeroVironment builds out defense tech portfolio with BlueHalo acquisition

AeroVironment and BlueHalo view their complementary customers, access to new markets and financial synergies as the drivers of their all-stock combination valued at $4.1 billion.

AeroVironment is effectively doubling in size through the move announced Tuesday. The transaction adds space technologies, capabilities in countering uncrewed systems, aircraft systems, directed energy weapons, electronic warfare, cyber and artificial intelligence.

BlueHalo was unveiled in 2020 by the private equity firm Arlington Capital Partners and has put together a run of large wins:

• A $1.4 billion contract to build a multi-band deployable ground terminal known as the BADGER system to enable resilient satellite communication.
• A contract for a high-energy laser that can knock out small unmanned aerial systems, known as LOCUS.

BlueHalo expects to have $900 million in 2024 revenue. AeroVironment recorded $716.7 million in its most recent fiscal year that ended April 30. Executives put the combined company's pro forma financials at $1.7 billion in revenue with $300 million in EBITDA (earnings before interest, taxes, depreciation and amortization).

The sale of BlueHalo represents another major exit by Arlington Capital. Other sales include Octo Consulting, which went to IBM for $1.2 billion, and the sale of Novetta to Accenture's U.S. federal arm for roughly $1 billion.

Both companies are eyeing complementary capabilities around manufacturing, training and servicing uncrewed systems, loitering munitions, and other advanced technologies.

AeroVironment’s shareholders will own 60.5% of the new entity, while Arlington Capital and other BlueHalo equity holders will own the remaining 39.5%. AeroVironment’s chairman, president and CEO Wahid Nawabi will retain those leadership positions and BlueHalo CEO Jonathan Moneymaker will work as a strategic advisor.

The boards of both companies have approved the acquisition, which they expect to close during the first half of 2025.

AeroVironment is touting several benefits it sees in the addition of BlueHalo. One is a much broader portfolio across the air, land, sea, space, and cyber domains. The combined company will also have more counter-UAS offerings

“As we look at the counter US market, we've always looked at that as an integrated layer defense strategy, ranging from passive detection to [radio frequency] defeat into our LOCUS laser weapon system and now entering the kinetic market,” Kevin McDonnell, chief financial officer for AeroVironment, said during a conference call with investors Tuesday.

Both companies also see themselves in complementary markets that can drive revenue growth, with AeroVironment having a significant international business and BlueHalo's footprints primarily in the U.S.

“There is tremendous opportunity for us to cross sell their solutions to our customers internationally,” Nawabi said. “Additionally, solutions that we offer in the area of small UAS, medium UAS, and munitions are things that they don't have in their portfolio where they can offer that to their customers.”

“We're talking about a very, very profitable, sustainable entities that are going to combine and create a lot of value for all of our stakeholders, especially our shareholders,” Nawabi added