Kraken Robotics (PNG) M&A announcement summary

Deal rationale and strategic fit

• Combines two leading subsea technology providers to create a global supplier for maritime security, infrastructure inspection, and dual-use technology, expanding product offerings and total addressable market.

• Minimal product overlap and complementary products enable value creation, cross-selling, and deeper customer relationships in defense and commercial markets.

• Expands technical capabilities, production capacity, and geographic reach with strategic locations and experienced engineering teams.

• Improves business diversification and ability to meet rapid growth in underwater vehicles, systems, and offshore energy.

• Positions the combined entity as a major supplier in fast-growing defense and maritime surveillance markets.

Financial terms and conditions

• Purchase price is $615 million (CAD 615 million), representing 9.7x expected 2025 adjusted EBITDA, with $480 million in cash and $135 million in equity to the seller.

• Funded by a $150 million credit facility, $350 million public offering, and equity issued to Covelya shareholders.

• Seller to own approximately 4% of the pro-forma company post-transaction, with shares subject to a lock-up agreement.

• Combined company expected to generate ~$365 million revenue and ~$88 million adjusted EBITDA in 2025, with a 24% EBITDA margin.

• Expected leverage ratio at closing is 0.8x adjusted EBITDA, with improvement anticipated through EBITDA growth and debt repayment.

Synergies and expected cost savings

• Immediate accretion to financial results, with low- to mid-double-digit EPS accretion in 2027 after cost synergies.

• ~$10 million in cost synergies expected within 24 months via supply chain, facilities, R&D, technology integration, IT, and admin optimization.

• Revenue synergies anticipated from cross-selling and integrated solutions, though not included in current projections.

• Immediate accretion across revenue, EBITDA, cash flow per share, and EPS.