Shield AI has agreed to buy radar maker Echodyne for $5.3 billion and is raising $2.5 billion to help pay for it, the defense technology company said Thursday. The deal values Shield AI at $28.8 billion, more than double its worth in March, according to Bloomberg.
How Is Shield AI Financing the Echodyne Deal?
The financing includes a $1 billion Series H co-led by Disruptive and Innovation X Capital, $1 billion in structured equity from Blackstone funds and $500 million in debt from JPMorgan. Disruptive closed a $10 billion fund last month to make large bets on late-stage artificial intelligence and defense companies.
How Much Is Shield AI Paying for Echodyne?
Shield AI will pay $4.8 billion when the acquisition closes, plus up to $500 million more if Echodyne meets performance targets. The company expects the deal to close in early 2027. The new funding only goes ahead if the acquisition does.
What Does Echodyne Make?
Echodyne, based in Kirkland, Washington, makes compact radars used in counter-drone and security systems in more than 40 countries. Its customers include the U.S. military.
Shield AI makes Hivemind, artificial intelligence software that flies military aircraft on its own, and the V-BAT surveillance drone. It is also building X-BAT, an AI-piloted fighter jet that takes off vertically. Chief executive Gary Steele said this week that the jet would make its first flight before the end of the year.
Steele told Bloomberg that Echodyne marks the company’s first step into “dual-use” hardware, meaning products that can also be sold outside the military. So far, every one of Shield AI’s end users has been a government.
“Think about public safety, whether it’s the Super Bowl or FIFA, just literally every single thing is going to need protection from drones,” Steele said.
Shield AI has raised $5.4 billion in equity so far from backers including Andreessen Horowitz and Point72. Its headcount has more than doubled in a year, to nearly 2,300 employees.
Valuations across defense technology are climbing quickly. Rival Anduril is now valued near $90 billion, and drone maker Mach Industries nearly quadrupled its value in June.
Steele said he was not worried that Democrats winning both houses of Congress could bring more scrutiny of defense spending. “Even with the midterms, I think there will be a common view of what needs to be done on defense,” he said.
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