Acquisition of new interceptor capability

Electro Optic Systems Holdings Limited (“EOS” or the “Company”) (ASX:EOS) today announces that it has entered into an agreement to acquire the UK-based interceptor business (the “Interceptor”) from MARSS Group (“MARSS”) for a total initial investment of €5.5 million (approximately A$10 million). 

Key Highlights

• Acquisition of complementary counter-drone capability – emerging advanced technology, seen as highly promising in the future counter-drone product mix
• Easing integrated into EOS’ product portfolio for sale to existing and new customers
• Expected 12-24 months of further development before full commercial launch – faster and lower risk than in-house development. Further EOS investment of up to A$10m over next three years, with potential for customer development funding
• Further establishes EOS as the leading counter-drone capability company

Background

Interceptor drones are being developed & for use in Ukraine and other conflicts.  This emerging advanced technology is seen as a critical future counter-drone tool due to key benefits: 

• Agility – capable of moving very fast to defeat equally fast moving and agile threats
• Range – able to operate at distances up to 5km - beyond the current EOS’ Remote Weapon System (“RWS”) range
• Cost – lower cost compared to traditional rockets and missiles
• Effectiveness – more effective than some soft-kill effectors (i.e. jammers less effective)
• Collateral – interceptors create low collateral damage (compared to some alternatives)
• Smart – Use advanced AI to counteract intelligent targets

The New EOS Interceptor

Following launch, the system pursues the target with onboard imaging, an infrared seeker and market-leading AI-based guidance. They can be operated fully autonomously if required.  

The system is compact and mobile, suited to fixed sites and vehicle deployment, and is designed to integrate with common sensors and command and control systems as part of a layered counter drone solution. 

A version of the system can be side-loaded to EOS’ RWS.

Strategic Rationale

The acquisition is consistent with EOS’ stated strategic intent of expanding its counter-drone capability and offers several strategic benefits:

• Interceptor will broaden EOS’ counter drone ‘effector’ portfolio complementing EOS’ RWS and High Energy Laser Weapons, offering another defensive layer.
• This important effector has high strategic product potential due to:
  • AI capability to counter ‘smart’ drones and high-speed ability (up to 290km/h)  
  • Low production cost compared to alternative effectors (e.g. rockets and missiles) 
  • Ability to be integrated within EOS’ RWS 
• Additional potential in new markets needing ‘low collateral’ response (incl civil & domestic).  
• Extends EOS software/AI capability and establishes EOS’ in the UK (AUKUS partner) market. 

The Transaction

EOS has agreed to acquire all of the Interceptor assets from MARSS and employ the expert team of specialised engineers that created this product to continue its development.  

The initial investment of ~$10m will be funded from EOS’ existing cash reserves. It is expected that there will be no material impact on near-term financial results. 

Completion is expected following receipt of required approvals and satisfaction of customary conditions. EOS will provide further updates in line with its continuous disclosure obligations. 

This announcement has been authorised for release to the ASX by the Board of Directors of the Company.