Palladyne AI Launches Defense Arm Following Strategic Acquisitions

“Palladyne AI has formed an operating division focused on defense after acquiring GuideTech and two Crucis companies, Warnke Precision Machining and MKR Fabricators.

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“Through the creation of Palladyne Defense, we are transforming from an AI software innovator into a vertically integrated defense technology company. We are combining breakthrough autonomy with American manufacturing strength to create a defense enterprise that is fast and scalable by design,” Ben Wolff, president and CEO of Palladyne AI, said in a statement published Monday.

“By uniting our patented AI with proven design, engineering and manufacturing capabilities, we are advancing the Department of War’s modernization priorities through intelligent, resilient, low cost-per-effect, reshored defense systems that strengthen readiness and preserve U.S. technological sovereignty, ensuring America’s ability to build and sustain its own next-generation defense systems,” Wolff added.

How Will the Deal Expand Palladyne’s Defense Capabilities?

Palladyne Defense will combine Palladyne’s embodied artificial intelligence and autonomy capabilities with GuideTech’s flight software, advanced avionics and system engineering and Crucis companies’ precision machining, fabrication, assembly and other domestic manufacturing capabilities.

The combined operation is positioned to meet the Department of Defense’s modernization priorities including intelligent autonomy, rapid iteration and secure domestic production.

Palladyne expects the acquisitions to accelerate its revenue growth and strengthen supply chain security.

“Our vertically integrated model allows us to meet emerging defense and public safety needs while reshoring capability and accelerating innovation”” noted Wolff.

What Would Be Palladyne Defense’s Role in the Broader Defense Ecosystem?

With these additions, Palladyne Defense aims to become a provider of autonomous platforms, avionics suites and components used in a range of U.S. military systems.

GuideTech brings to the division its BRAIN avionics, FLEX flight software suite, project Banshee loitering munition system and project SwarmStrike cruise-class autonomous munition. 

The Crucis companies add precision machining and fabrication capacities that support the F-16, F-35, Harpoon and Tomahawk missiles, and Bradley Fighting Vehicle, among major defense programs.

Palladyne Defense will help reshore defense tech and production capacity, address capability gaps and meet bespoke development requests from DOD, military branches and allied partners.

“By joining forces with Palladyne AI and GuideTech, we gain the scale and technology needed to expand our reach and better serve America’s defense industry. We currently work with primes such as Lockheed Martin, Kratos, Renk, Stark and more. This partnership will further strengthen our capacity to deliver high-quality U.S.-made components that keep America’s defense industrial base strong and competitive,” said Kevan Johnston, president of Palladyne Manufacturing and former chairman of the Crucis companies.

What Are the Terms of the Transaction?

The total value of Palladyne AI’s strategic acquisitions is approximately $31 million.

Palladyne issued $20 million in stock, paid $5 million in cash and assumed about $6 million in equipment finance and real estate debt.

The transaction includes a potential payout for GuideTech, whose owners can earn up to $25 million over five years once cumulative revenue from GuideTech’s products and services exceeds $71 million.