AeroVironment to acquire BlueHalo for $4.1B

AeroVironment, an Arlington County defense contractor, announced this week it will purchase aerospace and defense tech firm BlueHalo for approximately $4.1 billion in an all-stock transaction.

Also based in Arlington, BlueHalo is owned by private equity firm Arlington Capital Partners and works in space technologies, counter-uncrewed aircraft systems, directed energy, electronic warfare, cyber, artificial intelligence and uncrewed underwater vehicles. In 2022, the company won a $1.4 billion contract from the U.S. Space Force to modernize satellite operations.

BlueHalo estimates its 2024 revenue to be more than $900 million, an increase from $886 million in 2023. The company has a funded backlog of nearly $600 million, according to Tuesday’s announcement. The combined company, expected to deliver more than $1.7 billion in revenue, will be based at AeroVironment’s corporate headquarters.

“BlueHalo was founded to address the most pressing challenges confronting the defense and national security community, from unconventional threats to near-peer adversaries. We have pioneered solutions for drone warfare, distributed autonomy, and the need for more robust and assured access to space in an increasingly contested, crowded and competitive domain,” Jonathan Moneymaker, BlueHalo CEO, said in a statement. “By uniting with [AeroVironment], we are building an organization equipped to meet emerging defense priorities and deliver purpose-driven, state-of-the-art solutions with unmatched speed. 

BlueHalo’s 10 “flagship solution families” and more than 100 patents will integrate with AeroVironment’s expertise in the design, development, manufacturing, training and servicing of uncrewed systems, loitering munitions, which are also known as suicide drones, and advanced technologies, according to the release.

The acquisition will allow for administrative and operational cost savings. The combined company is expected to deliver more than $1.7 billion in revenue.

“Together, we will drive agile innovation and deliver comprehensive, next-generation solutions designed to redefine the future of defense,” said Wahid Nawabi, chairman, president and CEO of AeroVironment.

The deal is expected to close in the first half of 2025 subject to regulatory approvals, AeroVironment shareholder approvals and other closing conditions. 

Under the agreement, AeroVironment will issue about 18.5 million shares of company stock to BlueHalo. Following the close of the acquisition, AeroVironment shareholders will own about 60.5% of the combined company and BlueHalo equity holders will own about 39.55%. As the majority owner of BlueHalo, Arlington Capital Partners “will retain a significant ownership stake in the combined company.” 

Nawabi will be chairman, president and CEO of the combined company, while Moneymaker will serve as a strategic advisor to Nawabi and the combined company management team. Arlington Capital Partners will have the right to appoint two directors to the combined company’s board. 

Arlington Capital Partners and BlueHalo used J.P. Morgan Securities as a financial advisor and Goodwin Procter as legal advisor. RBC Capital Markets is serving as financial adviser, and Latham & Watkins is serving as legal advisor to AeroVironment.

AeroVironment relocated its corporate headquarters from Simi Valley, California, to Arlington in 2021.