Veloryx, a homeland security company, said on Tuesday it is in advanced negotiations and the final stages of signing a binding agreement to acquire a 70% controlling stake in defense drone maker Aero Sol Aviation Solutions Ltd.
Under the proposed deal structure, Veloryx would buy 70% of Aero Sol’s shares for about 26 million shekels, or roughly $7 million, and make an additional investment of about 9 million shekels, or about $2.4 million, in several installments to support the company’s development and expansion. Veloryx also would receive an option to buy the remaining shares at a pre-agreed price.
The potential acquisition is part of Veloryx’s new business strategy to turn itself into a multidisciplinary homeland security group through mergers and acquisitions of companies with complementary technologies.
The company said it aims to build an integrated security ecosystem that includes unmanned systems, sensors, detection and identification systems, robotics, command-and-control platforms and advanced monitoring technologies, with the goal of offering end-to-end solutions for border protection, facility security and the defense of critical infrastructure.
Veloryx said it believes adding companies with proven operations and existing sales would create technological and commercial synergies across the group while expanding its presence in defense and civilian markets worldwide.
Aero Sol is an Israeli defense company that develops, manufactures and operates drone systems for defense and government customers. The company says it has more than 13 years of experience in the field and supplies operational drone systems to defense clients in Israel and abroad.
Its product line includes four types of tactical drones, with advantages the company says include long flight endurance and a low acoustic signature. The platforms are designed for reconnaissance, intelligence and security missions. Some models can carry payloads of up to about 10 kilograms, or 22 pounds, while others can remain airborne for up to about 90 minutes, depending on the model and operational requirements.
The company also works with composite materials and provides aviation solutions to defense and government clients. Its customers include security organizations in Israel and overseas as well as major defense companies.
According to company data, Aero Sol generates annual revenue of between 15 million and 20 million shekels, or roughly $4 million to $5.4 million, and has an EBITDA margin of about 20%, which the companies say reflects profitable operations backed by an active customer base.
The unmanned systems market has grown sharply in recent years, driven by rising use of drones in defense systems, border protection, infrastructure security and intelligence operations.
Veloryx CEO Roy Bargil Photo: VeloryxVeloryx said recent global developments, along with security and criminal incidents involving drones, underscore growing demand for advanced systems to monitor, detect and respond to low-altitude aerial threats. At the same time, the company said, many countries have been investing heavily in the development and procurement of unmanned systems as part of their security and intelligence infrastructure.
Veloryx said bringing Aero Sol into the group would expand its capabilities in the drone sector and allow it to integrate unmanned systems into a broader homeland security offering that also includes detection systems, sensors and command-and-control platforms.
“The identity of the company we intend to acquire reflects the type and nature of the companies and solutions we plan to bring into Veloryx, with the goal of transforming the group into a leading player in the homeland security sector,” Veloryx CEO Roy Bargil said. He said the pace of the negotiations reflected the company’s determination to rapidly implement its strategy and provide a modular, comprehensive and integrated solution for border protection and homeland security in both military and civilian sectors, while also accelerating the growth of acquired companies as standalone businesses.