Redwire pushes further across defense with $925M Edge Autonomy acquisition

Gettyimages.com / Ko_orn

Find opportunities — and win them.

In explaining the move to Wall Street, Redwire's chief executive Pete Cannito cites connectivity between space assets and drones closer to Earth's surface as a growth opportunity for the company.

Redwire was born in 2020 as a space company and that should remain its DNA following its agreement to acquire the unmanned aerial system maker Edge Autonomy in a transaction valued at $925 million.

In announcing this move, Redwire is also declaring intent and ambition to broaden itself across the entire defense technology landscape. Space certainly is a part of that picture, but the addition of Edge Autonomy brings in a business whose technology has been used in Ukraine’s defense against Russia.

Jacksonville, Florida-headquartered Redwire will pay $150 million in cash and $775 million in stock for Edge Autonomy. All parties expect the combination to close in the second quarter of this year, pending shareholder and regulatory approvals.

During a call with investors Tuesday, Redwire’s chairman and chief executive Pete Cannito characterized Edge Autonomy’s lineup of drones as primarily operating at the tactical level of military operations.

Those are also known in the drone industry as Group 2 UAS, or small UAS. Cannito said either one or two users in the field tend to operate the systems.

Edge Autonomy also designs its systems to incorporate edge computing and artificial intelligence functionality in order to enable real-time data processing, autonomous navigation and collaborative swarm capabilities.

But Edge Autonomy has also spent time, energy and resources on improving the battery life of its drones since the company was formed in 2021. Cannito said that creates “venture optionality in terms of moving to Group 3 missions,” or those typically carried out by larger drones in terms of size and capability.

As Cannito also pointed out, communications over the horizon becomes more important as smaller UAS increase their length of missions.

“That's where satellites come in ... as they take on these more robust mission sets, the ability to communicate and even do command and control through space would be a key additional capability to improve their overall performance, and that’s just when we’re talking about traditional missions,” Cannito said. “When you start looking at all-domain operations where you have emerging concepts, where groups of autonomous UAS platforms could receive command and control instructions or missions and data from space assets, that opens up a whole different set of new highly differentiated capabilities and mission sets.”

As Redwire sees the world, its low-Earth orbit satellites can connect with Edge Autonomy’s drone tech to bring military operators the kind of multi-domain connectivity Cannito referenced. That is where the space element factors into Redwire’s thinking for this acquisition.

Redwire has been an aggressive buyer since it was founded by the private equity firm AE Industrial Partners in 2020, when the company touted itself as largely a space infrastructure player. AEI is also a backer of Edge Autonomy.

The addition of Edge Autonomy and its 600 employees represents a step in Redwire’s longer-term push for a larger defense portfolio.

In an investor presentation, Redwire touts the combined company’s revenue for this year at $535 million-to-$605 million and the merged workforce standing at 1,300 people. Redwire also sees this year’s combined profit in the range of $70 million-to-$105 million.

AEI, along with private equity firms Bain Capital and Genesis Park collectively hold 73% of the outstanding voting shares in Redwire. They have agreed to vote in favor of the transaction, which must be approved by a majority of the voting shares not held by AEI.

A special purpose acquisition company backed by Genesis Park merged with Redwire in 2021 to take the company public.

Post-close, AEI can appoint four directors to Redwire’s board of directors. That number will fall if and when AEI's ownership in Redwire drops below 50%, while Edge Autonomy's backers can appoint one director as long as they hold at least 25% of the stock.

J.P. Morgan Securities and GH Partners are financial advisers to Redwire, whose legal adviser is Holland & Knight. A special committee of Redwire’s board of directors is working with Roth Capital Partners as financial adviser and Richards, Layton & Finger P.A as legal adviser. Citi is the financial adviser to Edge Autonomy, whose legal adviser is Kirkland & Ellis.