Redwire Shares Soar on Edge Autonomy Deal, Eyeing Defense Tech Growth
Tuesday, Jan 21, 2025 2:07 pm ET
4min read Redwire Corporation (NYSE: RDW) shares surged to a new 52-week high on Tuesday, January 21, following the company's announcement of a $925 million deal to acquire military drone manufacturer Edge Autonomy. The acquisition, expected to close in the second quarter of 2025, is set to transform Redwire into a global leader in multi-domain autonomous technology, expanding its portfolio to include combat-proven autonomous airborne platforms.
The deal is expected to be immediately accretive to Redwire's revenue, Adjusted EBITDA, and Free Cash Flow. For the twelve months ended December 31, 2025, Redwire forecasts full-year revenues of $535 million - $605 million and Adjusted EBITDA of $70 million - $105 million with positive Free Cash Flow, assuming the transaction had been consummated on January 1, 2025. Edge Autonomy, with revenues of $222 million and Adjusted EBITDA of $72 million for the last twelve months ended September 30, 2024, is expected to contribute significantly to Redwire's financials.
The acquisition aligns with Redwire's long-term investment strategy, focusing on stable, predictable growth and strategic acquisitions for organic growth. By expanding into the defense technology sector, Redwire aims to capitalize on the growing demand for autonomous warfare capabilities and multi-domain operations. The combined company is expected to generate over $500 million in annual sales, with approximately 50% of revenue coming from U.S. and international defense contracts.
Peter Cannito, Chairman and CEO of Redwire, highlighted the strategic significance of the merger: "The combination of Redwire and Edge Autonomy creates a uniquely positioned space and defense company focused on two of the fastest-growing trends in defense technology. As space and airborne platforms converge into an integrated network of autonomous, collaborative systems, Redwire will be poised to provide end-to-end solutions for multi-domain operations from the surface of the earth to the surface of the moon and beyond."
The acquisition also presents international growth opportunities, particularly in Europe, where Edge Autonomy has seen significant success. However, Cannito tempered expectations for 2025, citing uncertainty around Ukraine's ongoing conflict with Russia.
Analysts at Alliance Global Partners echoed the positive sentiment, noting that the acquisition creates a much stronger investment thesis for Redwire. They reiterated a buy rating and raised their price target on Redwire's shares to $24 from $16.
In conclusion, Redwire's acquisition of Edge Autonomy is a strategic move that aligns with the company's long-term investment strategy and positions it to capitalize on the growing demand for defense technology. The deal is expected to be immediately accretive to Redwire's financials and create new integrated capabilities for customers, leveraging connectivity across space and airborne operations. As Redwire's shares hit a new 52-week high, investors should closely monitor the progress of this transformative transaction and its potential impact on the company's valuation and growth prospects.
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