Electro Optic Systems has sold off its naval satellite communication subsidiary to UK-based defence tech company Cohort for $144 million to focus efforts on counter-drone technology.
The ASX-listed defence, space and communications company has entered into a binding share sale agreement to sell Brisbane-based EM Solutions, which it acquired for $25 million in 2019.
EM Solutions manufacturers on-the-move satellite communications equipment systems used by the Australian Border Force, Royal Australian Navy and the United States government.
EOS had originally acquired EM Solutions to support its satellite telecommunications spin off SpaceLink, which was granted conditional debt funding from Export Finance Australia for an initial constellation of medium-earth orbit satellites in early 2022.
But after a comprehensive process to find investors, the venture was terminated in November 2022, with the company opting to redirect funding toward its core defence technology and space offerings.
A $71 million Australian satellite manufacturing hub project led by EOS was also shuttered last year after a $23.6 million grant under the Collaboration stream of the former government’s Modern Manufacturing Initiative was pulled.
On Thursday, EOS said that while EM Solutions was an “attractive, growing and profitable business”, it had become non-core to its current growth strategy, which is “focused on counter-drone systems”.
It said that the divestment would give it the “funding flexibility to more fully pursue” opportunities in the counter-drone market for both remote weapons systems and high energy laser weapons, while continuing to commercialise its intellectual property.
“The proposed transaction clearly demonstrates EOS’ strategic focus and determination to succeed in the rapidly evolving and growing counter-drone market,” EOS chief executive and managing director Andreas Schwer said.
“We had strong interest from the market in the EM Solutions business, and by releasing capital at this time, we are very well placed to execute our EOS growth strategy. We will continue to deploy capital in a disciplined way.
The $144 million sale, which has received Foreign Investment Review Board approval and will be complete in six months, will allow EOS to pay off $64.4 million in outstanding debt with investment house Soul Patts.
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