Shield Agrees to Buy Echodyne for $5.3 Billion, Raises $2.5 Billion
Defense tech firm Shield will buy radar maker Echodyne in a $5.3 billion deal. How the financing works, who is affected and when the deal should close.
Shield, a defense technology company, has signed a definitive agreement to acquire Echodyne Corp., a radar maker based in Kirkland, Washington, in a deal valued at $5.3 billion, the companies announced Nov. 5. To pay for it, Shield is raising $2.5 billion, including a Series H round that values the company at $28.8 billion after the new money.
Echodyne builds compact radars that spot and follow drones. Its systems sit inside hundreds of counter-drone and security products used by military, government and commercial buyers in more than 40 countries, according to the announcement.
How Shield is paying for Echodyne
The $2.5 billion financing has three parts, Shield said:
- $1 billion in Series H equity at a $28.8 billion post-money valuation, co-led by Disruptive and Innovation X Capital
- a $1 billion structured equity investment from funds managed by Blackstone
- $500 million in debt, with JPMorgan Chase Bank, N.A. as sole arranger
Other Series H investors include Advent, Snowpoint Ventures, Apandion, Center15 Capital and the Strategic Investment Group of JPMorganChase’s Security and Resiliency Initiative. Shield said the round’s proceeds will mainly fund the purchase.
The price is not paid all at once. Of the $5.3 billion, $4.8 billion will be paid and issued when the deal closes. Up to $500 million more depends on Echodyne hitting performance targets the two sides agreed on. This kind of payment, often called an earnout, ties part of the price to how the acquired business does after the sale. The companies did not disclose the targets or the split between cash and stock.
What Echodyne makes
Echodyne’s radars use a patented design it calls MESA, short for Metamaterials Electronically Scanned Array. The radars are solid-state, meaning they steer their beam electronically with no moving dish. Military customers mount them on remote weapon stations, high-energy lasers and high-power microwave systems, where they help guide interceptors toward incoming drones. Civilian users rely on the same hardware to guard stadiums and airports against unauthorized drones and to help police and fire departments fly their own drones in shared airspace.
In September, Echodyne won a contract with a $250 million ceiling from Joint Interagency Task Force 401 to supply counter-drone radar to U.S. and allied forces. The company recently opened an 86,350-square-foot factory in Kirkland, a $40 million investment that can turn out about 30,000 radars per year.
Shield, founded in 2015, sells Hivemind autonomy software, the V-BAT and X-BAT autonomous aircraft and Aechelon simulation tools. Both companies expect revenue to grow by triple digits this fiscal year, the release said.
What it means for employees and customers
Echodyne will keep its team after the sale and will continue selling MESA radars as standalone products to other integrators and end users. Eben Frankenberg, Echodyne’s CEO, will report directly to Shield CEO Gary Steele and stay in charge of products, manufacturing and relationships with partners and customers.
For Shield, the deal adds radar and counter-drone hardware to its Mission Systems unit. Steele said the purchase gives Shield wider reach in a fast-growing counter-drone market and spreads its revenue across more sources. Frankenberg said joining Shield creates a company with “the size and breadth to deliver even more value” to customers.
The deal also adds to Shield’s footprint in Washington state. In September, Shield picked Washington as the place where X-BAT will be produced.
What happens next
The companies expect the acquisition to close in early 2027. Closing depends on regulatory approvals and other customary conditions; the announcement did not name specific agencies.
J.P. Morgan Securities LLC is Shield’s exclusive financial advisor on the acquisition, with Wachtell, Lipton, Rosen & Katz as legal counsel and Covington & Burling LLP on regulatory and business diligence. Sullivan & Cromwell LLP advised Shield on the financing. Morgan Stanley & Co. LLC and Robert W. Baird & Co. Incorporated are financial advisors to Echodyne, and Fenwick & West LLP is its legal counsel.
Source: PR Newswire
