Aerodrome Heads to the U.S. – Is This Merger a Game-Changer or Just Smoke and Mirrors?

Aerodrome announced it has signed a non-binding term sheet to acquire a U.S. drone company that provides solutions and products to government agencies, security organizations, and civilian customers. The deal is expected to be financed through a combination of cash and stock, with the target company’s valuation set at no less than $32 million. Aerodrome will pay 40%-45% in cash—at least $18 million—while the remaining amount will be settled in shares allocated to the target company’s shareholders.

Where will the $18 million come from? Aerodrome doesn't have that kind of cash on hand. Why pursue such a deal while seemingly being in a strong position with large orders secured? It raises questions. There are many uncertainties surrounding Aerodrome. The company, a long-time player in the drone industry, should have been thriving, yet its core business—providing drone services to various companies—has been shrinking. Surprisingly, it shifted focus to manufacturing drones. But why?

After announcing a major deal to supply drones worth 137 million shekels (roughly $38.5 million), Aerodrome has since reported smaller deals that suggest its potential isn't as big as initially thought. This includes launching a manufacturing operation in which it doesn't hold full control.

Can Aerodrome Really Acquire a Larger Company?

Now, Aerodrome is preparing to buy a company that is bigger than itself in terms of valuation. How will that happen? That’s a question for CEO Roy Dagani, who has yet to respond to our request for an interview.

Perhaps this all connects—maybe the acquisition is the answer to how Aerodrome intends to fulfill its massive 137-million-shekel drone order despite lacking in-house manufacturing capabilities. Could buying an established firm be the missing piece?

According to the term sheet, the target company is a U.S.-based drone provider operating in multiple markets. It runs a large technical support center in the U.S. and serves a diverse customer base. Acquiring it could significantly expand Aerodrome’s presence in the U.S. and give it new distribution channels.

The deal is contingent on due diligence, regulatory approvals, and securing financing for the cash component. Aerodrome plans to fund it through equity issuance, a combination of equity and debt financing (up to 30%), or other financial instruments. The target company’s controlling shareholders have committed to remaining in management roles for at least four years.

עוד תכניות

If completed, this acquisition could enhance Aerodrome’s foothold in the U.S. drone market and open new customer opportunities. The target company has agreed to an exclusivity period until May 1, 2025, meaning it won’t negotiate with other potential buyers during this time.

Aerodrome delayed announcing the deal until certain regulatory and legal constraints were cleared, which could have impacted its terms or completion. The acquisition aligns with Aerodrome’s strategy to expand in the U.S., a goal it set back in 2022.

Is Aerodrome Searching for a Lifeline?

A few months ago, Aerodrome secured a major order worth 137 million shekels to supply drones and related products to a government customer. The timing of today’s announcement suggests the company is looking for a lifeline—a move that could help it fulfill existing orders. Any delay in delivering the order could impact the company's growth trajectory.

Aerodrome isn’t a new player on the stock exchange. It has demonstrated sales capabilities and has secured significant orders. The company recently signed an MoU to establish a UAV manufacturing plant in partnership with an Israeli defense company. On paper, its potential is huge—yet its stock price does not reflect that.

The market remains skeptical that Aerodrome can execute its orders and generate meaningful profits. Investors seem to be judging the company with extreme caution. With a market cap of just 75 million shekels, its stock initially rose following the massive order announcement but has since fallen back.

The company is still unprofitable, though that’s common in the sector. The large order is supposed to propel Aerodrome into profitability, as it exceeds its current sales by a significant margin. However, failing to meet delivery schedules and customer expectations could be disastrous. If the U.S. acquisition goes through, it could provide Aerodrome with a fresh start—perhaps even a much-needed escape route into a new phase of growth.