Leonardo DRS is planning the acquisition of Israeli firm RADA Electronics Industries, driven in part by lessons learned from the war in Ukraine.
In an interview with Defense News, Leonardo DRS Chairman and Chief Executive Officer William Lynn said adding RADA’s advanced radar capabilities to its portfolio will improve the company’s ability to provide force protection capabilities to military customers and complement its integration capabilities.
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And the war in Ukraine shows the increasing importance of force protection measures as the U.S. prepares for its next conflict. Ukrainian troops have been devastatingly effective in ambushing Russian armored vehicles with shoulder-launched munitions, and Lynn said the combined company’s capabilities could help the U.S. defend against similar attacks in a future war.
He pointed to the Trophy Active Protection System the U.S. Army uses on its M1 Abrams tanks, which Leonardo DRS developed in partnership with Rafael Advanced Defense Systems, and the Iron Fist systems that are now being tested on the Bradley Infantry Fighting Vehicle and use RADA radars, as an example of what the company could provide.
“When you combine RADA and DRS, you’re going to cover both of the major active protection systems we’re going to be able to provide to U.S. and European militaries, either system depending on what they need in terms of the capabilities of the vehicle,” Lynn said. “The Ukraine conflict has highlighted those force protection needs, which is one of the central strategic reasons for this merger.”
The purchase strengthens the combined company’s force protection and counter-drone capabilities and boosts its ability to compete for future programs, he said.
The companies announced the deal Tuesday. Leonardo DRS, the U.S subsidiary of the Italian defense firm Leonardo SpA, is a mid-tier defense electronics firm that primarily serves the U.S. military. RADA provides software-defined tactical radars for the U.S. and Israel militaries as well as a handful of European countries.
RADA will become an Israeli subsidiary of Leonardo DRS when the deal closes in the fourth quarter. The combined company will keep the Leonardo DRS name. RADA will operate as a business unit within DRS’ advanced sensing segment.
Under the terms of the deal, Leonardo DRS will acquire all the share capital in RADA, in exchange for about 19.5% equity ownership to RADA shareholders. Leonardo DRS will assume RADA’s stock exchange listing, and is expected to trade on NASDAQ and the Tel Aviv Stock Exchange under the symbol “DRS.”
Lynn said returning Leonardo DRS to public trading will give it more financial stability and the flexibility to raise funds for further acquisitions. Predecessor DRS was listed until its 2009 acquisition by the Italian company that would become Leonardo.
Having RADA’s radar capabilities in house will be an advantage as the U.S. military develops its next generation of force protection programs, which could entail non-kinetic weapons such as microwaves and lasers, and consolidated counter-drone systems, he said.
Further, into the future, Lynn sees the military increasingly shifting toward systems that fuse sensors with communications capabilities, so battlefield commanders have a single integrated system that provides them data. When this happens, he said, it will be important to have radar as a fully established part of Leonardo DRS’s portfolio, not something it has recently brought on board.