Quarterly report [Sections 13 or 15(d)]

Business Combinations

v3.26.1
Business Combinations
 3 Months Ended
Mar. 31, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combinations
Note C – Business Combinations
Edge Autonomy Acquisition
On January 20, 2025, the Company entered into an agreement and plan of merger (as amended on February 3, 2025, and June 9, 2025, the “Merger Agreement”) with Edge Ultimate Holdings, LP, a Delaware limited partnership (“Ultimate Holdings”) to acquire 100% of the equity interests in Redwire Defense Tech Intermediate Holdings, LLC and its subsidiaries (f/k/a Edge Autonomy Intermediate Holdings, LLC) (“Edge Autonomy”), a leading provider of field-proven uncrewed airborne system technology (the “Edge Autonomy Acquisition”). On June 13, 2025, following the satisfaction of all regulatory approvals, including a stockholder vote, the acquisition was completed. Under the terms of the Merger Agreement Edge Autonomy emerged as the surviving entity and a wholly owned subsidiary of the Company. On the same day, the merger consideration was transferred, including $160.0 million in cash (“Cash Consideration”) and the issuance of 49,764,847 shares of the Company’s common stock (“Equity Consideration”). Common stock was held back from the Equity Consideration to fund post-closing purchase price adjustments, if any, in the amount of $5.0 million, valued at a price per share of $15.07. The Company funded the Cash Consideration using cash on hand and proceeds from its indebtedness. Refer to Note H – Debt for additional information on the Company’s outstanding debt.

The acquisition was accounted for as a business combination, whereby the excess of the consideration paid over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is not deductible.

The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.
June 13, 2025
Cash consideration
 $ 160,000 
Fair value of common stock issued(1)
862,561 
Equity holdback
 5,000 
Payable to Seller
 2,171 
Less: Working capital adjustment
 5,000 
Purchase consideration
 $ 1,024,732 
Assets:
Cash
 $ 8,209 
Accounts receivable and other receivable
 10,716 
Contract assets
 69 
Inventory 61,378 
Prepaid expenses and other current assets 6,614 
Property, plant and equipment
 26,271 
Right-of-use assets 14,822 
June 13, 2025
Intangible assets
 298,100 
Total assets
 426,179 
Liabilities:
Accounts payable
 5,627 
Accrued expenses
 11,910 
Deferred revenue
 26,111 
Payable to seller
 1,670 
Other current liabilities
 938 
Long-term operating lease liabilities 14,973 
Deferred tax liabilities 62,193 
Other non-current liabilities 1,019 
Total liabilities
 124,441 
Fair value of net identifiable assets acquired
 301,738 
Goodwill
 $ 722,994 
(1) Fair value of the common stock issued is based on the Company’s common stock closing price of $19.08 on the acquisition date, June 13, 2025, less the fair value of the Edge Incentive Units of $87.0 million. Refer to Note O – Equity-Based Compensation for additional information on the Edge Incentive Units.

The following table summarizes the intangible assets acquired by class:
June 13, 2025
Weighted average useful life
in years
Customer relationships
 $ 15,400  8
Technology 264,800  13
Trade name and trademark
 17,900  8
Total intangible assets
 $ 298,100 
The amounts above represent the valuation analyses completed to assess the fair values of the assets acquired and liabilities assumed and the amount of goodwill to be recognized as of the acquisition date. These fair values were based on management’s estimates and assumptions. Certain values remain preliminary and could be revised as a result of additional information obtained regarding the assets acquired and liabilities assumed, including, but not limited to, certain working capital items and residual goodwill. The final determination of the fair values, purchase consideration, related income tax impacts and residual goodwill will be completed as soon as practicable, and within the measurement period of up to one year from the acquisition date as permitted under U.S. GAAP. Any adjustments to provisional amounts that are identified during the measurement period will be recorded in the reporting period in which the adjustment is determined. During the three months ended March 31, 2026, the Company recorded $1.7 million of measurement period adjustments to increase the payable to seller, which increased the balance of goodwill to $723.0 million.

The fair values of identifiable intangible assets were determined by using certain estimates and assumptions that are not observable in the market. The fair value of the acquired technology and trademark and trade name was estimated using the relief from royalty method. The significant assumptions used to estimate the fair value included forecasted revenues, expected royalty rates, and discount rates. The fair value of the acquired customer relationships was estimated using the multi-period excess earnings method. The significant assumptions used to estimate the fair value of customer relationships included forecasted revenues, expected customer attrition rates, and discount rates.

The results of operations of Edge Autonomy have been included in the Company’s consolidated results of operations since the date of acquisition, June 13, 2025 and are reported in our Defense Tech segment. The table below presents the revenues and net income (loss) of Edge Autonomy included in the condensed consolidated statements of operations and comprehensive income (loss) since the acquisition date, for the following periods:
Three Months Ended
  March 31, 2026
Post-acquisition revenues
 $ 36,414 
Net income (loss)
 (54,931)
Pro Forma Financial Data (Unaudited)
The table below presents the pro forma combined results of operations for the Company for the three months ended March 31, 2025, as though the acquisition of Edge Autonomy had been completed as of January 1, 2024.
Three Months Ended
March 31, 2025
Revenues
 $ 96,752 
Net income (loss)
 (10,115)
The amounts included in the pro forma financial information are based on historical results and do not necessarily represent what would have occurred if the Edge Autonomy Acquisition had taken place as of January 1, 2024, nor do they represent results that may occur in the future. Accordingly, the pro forma financial information should not be relied upon as being indicative of the results that would have been realized had the business combination occurred as of the date indicated or that may be achieved in the future.

The Company incurred nominal acquisition related costs for completed acquisitions during the three months ended March 31, 2026. During the three months ended March 31, 2025, the Company incurred acquisition related costs for completed acquisitions of $3.7 million. These expenses are included in transaction expenses on the condensed consolidated statements of operations and comprehensive income (loss).