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Drone firm Red Cat might make more defence acquisitions

Teal Drones' 4 Ship system allows a single pilot to simultaneously control up to four Golden Eagle unmanned aircraft. (Teal Drones, a subsidiary of Red Cat Holdings)

US-based Red Cat Holdings, which acquired unmanned aircraft system (UAS) manufacturer Teal Drones in 2021, is exploring potential deals to further expand its defence-related portfolio, according to the parent company's chief executive.

Red Cat is interested in software developers that could improve the ability of Teal's Golden Eagle small UAS to operate at night, when military missions often take place, president and CEO Jeff Thompson told Janes on 23 August. Most of the existing sensors that enable “autonomy and avoidance don't work at night”, he said.

Acquisition opportunities are plentiful because the venture capital (VC) firms that start-up companies often turn to for funding have become stingier amid economic uncertainty, Thompson said. The financing crunch is forcing startups to put themselves up for sale, and Red Cat – which is publicly traded – is an experienced buyer of drone firms, having completed four acquisitions since 2020.

The start-up situation “helps the deal flow for us because people know that we're in the drone space, we like to buy companies, we're well-financed, and we have access to capital”, he said. “I don't want to say that we're taking advantage of this VC downturn, but we're definitely a great alternative to people in the drone world and the software space.”

Red Cat might also pursue an acquisition that adds a larger, longer-endurance UAS to its portfolio. Such an addition would allow the company to help its customers perform different kinds of missions.

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