Autonomous combat drone maker Shield AI is buying radar startup Echodyne for $5.3 billion

Defense technology startup Shield AI Inc. announced today that it has agreed to buy Bill Gates-backed radar startup Echodyne Inc. in a $5.3 billion deal.

The acquisition is intended to improve Shield’s autonomous drone warfare capabilities, it said.

Echodyne is a 13-year-old startup best known for its Metamaterials Electronically Scanned Array, or MESA, technology, which is basically just a fancy name for its next-generation solid-state radar systems that can be integrated into a wide range of weapons and surveillance systems. The technology is designed to detect much smaller targets than traditional radar, including compact autonomous drones that have terrorized soldiers on the battlefields of Ukraine and in other modern conflicts.

The deal comes just a few months after Echodyne secured a $250 million contract with the U.S. Department of Defense’s anti-drone task force JIATF-401 to provide drone tracking technology to the U.S. military.

Echodyne’s advanced radar systems appear to be a natural fit for Shield AI, the developer of the X-Bat and V-Bat vertical takeoff and landing systems, known as VTOL drones. Shields V-Bat has made headlines in recent years after helping the U.S. Coast Guard track down drug traffickers seeking to bring illegal cargo into the U.S. on speedboats, and was notably involved in a number of major maritime drug raids. Shield AI is also the developer of Hivemind, an autonomous software system for controlling unmanned drones, unmanned boats and spacecraft.

Shield AI CEO Gary Steele said the deal will allow his company to accelerate its goal of moving into three different areas of unmanned systems. “We are building a new-generation defense technology company comprised of three fast-growing, high-margin and mutually supportive businesses: Autonomy Software, Autonomous Systems and Mission Systems,” he said.

Eben Frankenberg, co-founder and CEO of Echodyne, said Shield AI was a natural partner for his company because it shares the view that autonomous systems must be able to sense their environment to achieve desired mission outcomes. “By joining Shield, we are creating a company with the scale and breadth to deliver even greater value to our broad range of defense, government and commercial customers around the world,” he emphasized.

Steele said Echodyne will continue to operate as a standalone entity, a separate business unit within Shield AI’s mission systems business. Frankenberg will remain with the company, where he will report to Steele as part of the leadership team.

Echodyne will not lay off any staff and will not ask anyone to relocate, he said. In the longer term, the companies expect to see closer integration of Echodyne’s radar systems with Shield AI’s drones.

If the deal closes, it will pay out $4.8 billion. The remaining $500 million is contingent on Echodyne meeting certain performance targets, which were not disclosed. Shield AI said it was able to fund the deal with a combination of its own cash and a $2.5 billion cash injection, which came via a Series H funding round led by Blackstone and JPMorgan Chase, also announced today.

Shield AI has made key acquisitions in the past. His V-Bat and

Steele added that the company may not be done with acquisitions and will continue to look for more deals to accelerate its growth strategy.

Image: Shield AI