Arlington Capital Partners has agreed to sell BlueHalo to publicly traded AeroVironment in an all-stock transaction valued at $4.1 billion. Upon completion, Arlington Capital will retain a significant ownership stake in the combined company.
BlueHalo was established by Arlington Capital in October 2020 by merging its portfolio company Aegis Technologies, which was acquired in October 2019, with Applied Technology Associates and Brilligent Solutions. This combination enabled BlueHalo to specialize in areas such as space-qualified hardware, directed energy systems, missile defense, cyber and intelligence tools, and C4ISR systems (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance). The company’s clients include U.S. government agencies, intelligence organizations, and allied defense groups.
During Arlington’s ownership, BlueHalo expanded significantly through 18 additional acquisitions, including Asymmetrik in November 2021, a Maryland-based provider of software development and data analytics services; Citadel Defense in November 2021, a California-based provider of counter-unmanned aircraft systems (c-UAS); Design and Development Engineering Services Corporation (DDES) in July 2021, a New Mexico-based designer and manufacturer of space-qualified electronic systems; Verus Technology in April 2023, a Florida-based provider of SkyView-branded c-UAS technologies; and Eqlipse Technologies in February 2024, a Maryland-based provider of electronic warfare, cyber, and artificial intelligence products for U.S. Department of Defense and intelligence agencies.
BlueHalo’s key products include the LOCUST Laser Weapon System, a high-energy laser for counter-drone operations; HaloSwarm, an AI-powered autonomous uncrewed aerial system; Laser Communications Payloads, which enable secure, high-speed space communications; cyber operations tools for electromagnetic threat defense; and underwater drones and remotely operated underwater vehicles.
BlueHalo is headquartered in Arlington, Virginia, with additional facilities in New Mexico and Maryland. In 2023, BlueHalo generated $886 million in revenue, up from $759 million in 2022 and $660 million in 2021. Revenue for 2024 is projected to exceed $900 million.
“Arlington’s deep domain expertise, operating acumen, and national security relationships have been instrumental in helping establish BlueHalo as a trusted partner in defense innovation,” said CEO Jonathan Moneymaker. “Through this close partnership, we have been able to build a world-class management team, make significant R&D investments, and open new state-of-the-art facilities in Virginia, New Mexico, and Maryland near key customers in the space and intelligence communities.”
AeroVironment (NASDAQ: AVAV) founded in 1971, specializes in robotics, sensors, software analytics, and connectivity solutions for uncrewed aerial systems, tactical missile systems, and advanced unmanned platforms. Its products include the Switchblade Tactical Missile System, a loitering missile for anti-armor and anti-personnel missions; the Raven B, a hand-launched reconnaissance drone; and the Quantix Recon, an intelligence-gathering drone for mapping and surveying.
AeroVironment serves customers such as U.S. Department of Defense agencies, allied international militaries, and industrial users. The Arlington, Virginia-based company is led by CEO Wahid Nawabi and reported over $715 million in revenue for 2023.
“For over 50 years, AV has pioneered innovative solutions on the battlefield, and today we are poised to usher in the next era of defense technology through our combination with BlueHalo,” said Mr. Nawabi. “BlueHalo not only brings key franchises and complementary capabilities, but also a wealth of technologies, diverse customers, and exceptional talent to AV. Together, we will drive agile innovation and deliver comprehensive, next-generation solutions designed to redefine the future of defense.”
Arlington Capital Partners specializes in government-regulated industries, including aerospace and defense, technology, healthcare, and business services. The firm, headquartered in Bethesda, Maryland, is led by managing partners Matt Altman, Michael Lustbader, Peter Manos, and David Wodlinger. In February 2021, Goldman Sachs Asset Management made a non-voting minority equity investment in Arlington. In January 2024, Arlington closed its sixth fund, Arlington Capital Partners VI LP, with $3.8 billion in capital, exceeding its $3.25 billion target.
“As national security threats continue to evolve along with the rapidly changing geopolitical landscape, the combination of BlueHalo and AV will provide much-needed advanced defense technology capabilities to the U.S. and its allies,” said David Wodlinger, managing partner at Arlington Capital. “BlueHalo has achieved tremendous success under Arlington’s ownership due to its deep technical expertise, focus on innovation, and strong leadership team. We are excited to continue to support BlueHalo in this next chapter as they join forces with AV to create a leading defense technology company with an unrivaled combination of growth and scale driven by innovation and proven next-generation products.”
J.P. Morgan Securities served as the financial advisor to Arlington Capital and BlueHalo, while RBC Capital Markets advised AeroVironment.
AeroVironment’s acquisition of BlueHalo is expected to close in the first half of 2025.
© 2024 Private Equity Professional | November 22, 2024
