Rada is acquired by an Italian Leonardo SpA in a deal valued at $ 3.2 billion

Another Israeli security company is making its way to the flagship index of Ahuzat Beit Rada. The company that develops and manufactures radars, today announced a huge deal in which it merges with a subsidiary of the Italian Leonardo SpA, which deals with industry and security aviation. The subsidiary that will merge with Rada is Leonardo DRS, which deals with the development of military technologies. , So that Rada will become a wholly owned subsidiary of Leonardo DRS. The transaction does not include cash, but is made through an allotment of shares. Hold at 80.5%.
The deal is valued at $ 3.2 billion for the Leonardo DRS and $ 775 million (about NIS 2.35 billion) for Rada. This is a 34% premium on the share price at the end of the trading day yesterday, which reflected a value of NIS 2 billion for the company. Rada shares have risen about 40% since the beginning of the year, prior to the announcement of the merger. On the trading day, Avtal Aviv lost Rada's share by 4.77%, apparently due to dissatisfaction on the part of shareholders regarding the share allotment ratio in the merger.
Following the completion of the merger, which is expected in the fourth quarter of this year, the merged company, which will retain the Leonardo DRS name, will be traded in Tel Aviv and NASDAQ at a value of approximately $ 4 billion. - 35 leading and placing it in 13th place in terms of market value. This is a lower value than that of the banks, NICE, Azrieli and Elbit Systems, which is active in the field and is traded at a value of NIS 30 billion; And is higher than that of companies such as Strauss, Amot, Phoenix and Big. Leonardo SpA itself is traded on the Milan Stock Exchange at a value of about $ 6 billion.
Rada's shareholders today include institutional investors such as Phoenix (8.6%, including the shares held by its investment house, Excellence), Migdal Insurance (4%) and Meitav (4%). The private investment company DBSI of Yossi Ben-Shalom and Barak Dotan, which previously controlled Rada, also holds about 4%, a share it reached last year, after selling shares for a total of $ 80 million and ceasing to be interested. DBSI acquired control of Rada in 2016 and over the years has invested only about $ 13 million in the company, so the separation from it reflects a return of at least 6 times, even before the current merger deal. Ben-Shalom continues to serve as Rada's active chairman, and Dov Sela serves as CEO.
Leonardo DRS acquires Rada mainly to better position itself vis-à-vis the US administration. According to the companies' announcement, the merger will give birth to a company that operates in areas that the US defense budget gives increasing weight to - air defense, UAV protection systems and integrative sensing solutions.
Accordingly, the merged entity expects low single-digit growth in its EBITDA (earnings before interest, taxes, depreciation and amortization) over the next two years. According to the companies' announcement, the merged company's EBITDA in 2021 was $ 305 million, and on this figure it bases its growth forecast. The company's revenue in 2021, if the merger had taken place in it and applied to the full calendar year, would have been $ 2.7 billion. Rada ended 2021 with revenue of $ 117 million and EBITDA of $ 27.8 million. So in effect, Leonardo DRS is responsible for most of the merged company's revenue and financial performance.
Bill Lin, CEO of Leonardo DRS, noted that "Combining Rada's tactical radar capabilities with the strength of Leonardo DRS makes the United Company a leader in the rapidly growing defense of forces, increasing the target markets it addresses and the space of opportunity in the international market. , And ultimately floods with value for shareholders. "