Electro Optic Systems (ASX:EOS) executives told investors the company has agreed to acquire the business of European defense and security technology provider MARSS Group, describing the move as “transformative” and a major step toward EOS’s stated ambition to become a world-leading counter-drone company.
During the investor call, Managing Director and CEO Dr. Andreas Schwer said the acquisition is intended to “close the gap” between EOS’s existing sensor and effector offerings and a “fully integrated end-to-end solution” for counter-uncrewed aerial systems (counter-UAS) across military, homeland security, and commercial/civil applications.
NiDAR platform positioned as “brain” of integrated counter-UAS
Schwer highlighted MARSS’s installed base, saying the company has deployed more than 60 systems globally and that the technology has been exposed to real threats, describing it as “battle proven.” He also said MARSS is one of a limited number of C2 providers in the global counter-UAS market.
Executives said NiDAR is modular and scalable, capable of being deployed as:
- Fixed command centers (“war room” configurations) for single-site critical infrastructure protection
- Mobile containerized systems for expeditionary use
- Networked configurations that can link sites into regional or nationwide C2 systems
Schwer also said the platform can integrate EOS equipment as well as third-party sensors and effectors, emphasizing that customers can choose their preferred mix.
Transaction terms include upfront payment and earn-out tied to new orders
CFO and COO Clive (who did not provide a surname in the transcript) said the acquisition includes an upfront payment of US$36 million (approximately A$54 million) due at completion, which he said EOS can fund from existing cash reserves.
The deal also includes an earn-out running to May 2027. Under the earn-out, vendors receive €20 million for each €100 million of new orders secured during the period, with total earn-out capped at €100 million (corresponding to €500 million of orders). Clive said payment will be a combination of cash—at the vendor’s option but limited to €20 million—with the balance paid in EOS shares issued at a fixed price of A$7.40, based on a 25-day VWAP period used to set the share price due to EOS share-price movement during negotiations.
Clive said the shares will be issued within EOS’s existing ASX issuance capacity and that no additional shareholder approvals are required. Completion is expected in 2026, subject to standard conditions including customer approvals for major contracts and regulatory and defense export approvals in certain jurisdictions.
Management said the acquisition is expected to be “broadly neutral” for earnings and operating cash flow in 2026, with expectations for stronger contribution from 2027 as MARSS’s pipeline develops.
New A$100 million optional facility and profitability commentary
Clive also disclosed that EOS has secured a new committed optional A$100 million loan facility, intended to support growth opportunities and provide liquidity buffers in what he called a sometimes “lumpy” business. He said additional details will be provided once long-form documentation is finalized in the coming weeks.
On profitability, Clive said EOS has previously indicated group EBITDA break-even would come in “north of A$200 million.” He said MARSS has been profitable at EBITDA level at times over the past five years, though results have been “lumpy,” with some years of modest profit and other years of modest loss. He said management does not expect MARSS to add a significant unfunded operating cost burden and expects MARSS could contribute meaningfully to EBITDA from 2027 onward if contracts are secured.
Clive said EOS’s secured order book was “over A$400 million” at the end of December, excluding conditional contracts such as one previously announced with another high-energy laser customer.
Integration timeline and market expansion plans
In Q&A, Schwer said EOS expects about 18 months to integrate NiDAR with EOS’s existing product suite and have first demonstrators in the field. He said the same timeframe applies to embedding NiDAR algorithms into EOS fire-control software to enable a mesh-network capability among remote weapon systems, citing the R500’s next-generation onboard computing platform as enabling higher computing requirements.
Executives said the acquisition broadens EOS’s addressable markets into homeland security and civil applications, including critical infrastructure such as airports and urban environments, where Schwer said customers may prefer combinations of soft-kill options and EOS’s laser effectors rather than missiles or cannons.
Schwer said EOS will operate the MARSS portfolio as a standalone business unit called Integrated Counter-UAS Systems, and that the C2 product can be sold on a standalone basis without requiring EOS effectors.
Footprint and capabilities described
Schwer said MARSS has assets in France, Monaco, the UK, and Saudi Arabia, and that EOS plans to shift MARSS headquarters from Monaco to southern France to improve access to the French domestic market. He also outlined EOS’s broader footprint, including operations in Australia, the US (Huntsville, Alabama), the UAE, Singapore, and planned operating facilities in Germany focused on high-energy laser weapons and space-related activities.
Schwer said the combined organization will have more than 500 people, including more than 40 AI-capable software engineers, while also noting MARSS itself has a team size of about 80 people primarily located in Europe.
Executives also said NiDAR has integrated more than 100 different types of radar and electro-optical sensor units across its deployments. Schwer said EOS intends to pursue opportunities as a systems integrator going forward while continuing to supply sensors and effectors to other integrators.
About Electro Optic Systems (ASX:EOS)
Electro Optic Systems Holdings Limited engages in the development, manufacture, and sale of telescopes and dome enclosures, laser satellite tracking systems, electro-optic fire control systems, and microwave satellite dishes and receivers. The company operates in Defence Systems and Space Systems segments. It develops, manufactures, and markets fire control, surveillance, and weapon systems to military customers; designs, manufactures, and supplies remote weapon systems, as well as provides related installation, integration, and support services; and designs, manufactures, delivers, and operates sensors for space domain awareness and space control.
