Kraken Robotics Announces Closing of Covelya Group Acquisition

Kraken Robotics Inc. announced the closing of its previously announced acquisition of Covelya Group Limited for approximately $615 million, subject to closing adjustments. Unless otherwise specified, all dollar amounts in this release are denominated in Canadian dollars.

As previously announced, the strategic benefits to Kraken from the Acquisition include the following:

• Allows for deeper customer relationships in the fast-growing defense and maritime surveillance market.
• Expands product offering and Kraken’s total addressable market in subsea technology.
• Adds strategic locations for geographic expansion and improves business diversification.
• Bolsters technical capabilities with an experienced engineering team and highly advanced facilities.
• Financial accretion across key metrics, including $10 million of cost synergies within 24 months.

NEW PRODUCT ORDERS AND UPDATED 2026 FINANCIAL GUIDANCE

Since reporting its Q1 2026 results on May 28, 2026, Kraken and Covelya have secured additional product orders of approximately $13 million and $17 million, respectively. These awards bring announced orders in 2026 to approximately $110 million for Kraken and $182 million for Covelya Group. Gross profit margins associated with these orders are consistent with historical gross profit margins.

Kraken is updating its 2026 guidance to reflect the Acquisition’s July 2, 2026, closing date and the inclusion of Covelya Group, which was excluded from the Company’s prior guidance.

A summary table and a comparison to Kraken’s prior 2026 outlook is provided below. Revenue in 2026 is expected to be weighted toward the second half of the year.

As previously outlined at announcement, the Acquisition is expected to be accretive across key financial metrics and is expected to generate low-to-mid double-digit EPS accretion in 2027, after including the full impact of expected cost synergies.

The Company continues to maintain a strong balance sheet, with minimal net debt following the drawdown of the New Credit Facility, as defined below, and financial flexibility to fund future growth opportunities.

[1] Adjusted EBITDA is a non-IFRS financial measure with no standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. See “Non-IFRS Measures” in this press release.

^[2] Adjusted EBITDA margin is a non-IFRS financial ratio based on Adjusted EBITDA, with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. See “Non-IFRS Measures” in this press release.

LEADERSHIP TEAM AND ORGANIZATIONAL STRUCTURE

As part of its integration with Covelya Group and its subsidiary companies, Kraken is implementing a new organizational structure and strengthening its leadership team.

The new structure will consist of Kraken Group, which will focus on financial and organizational governance, and a clearly delineated Kraken Robotics operating business, whose business units will focus on operational excellence, strategic execution, and financial performance. These changes are designed to combine the strengths and talents of both organizations while creating a more efficient and scalable platform to support long-term growth.

In conjunction with these organizational changes, Bernard Mills has been promoted to President of Kraken. Bernard brings experience leading large organizations and driving operational performance. Prior to joining Kraken, Bernard served as CEO and Managing Director of Stelia North America, an advanced materials subsidiary of the Airbus Group. Before that, he was President of Ultra Sonar Systems, where he led a global organization of more than 850 employees.

Kraken’s new Corporate Group leadership will be comprised of the following:

• Greg Reid – Chief Executive Officer (CEO)
• Bernard Mills – President (formerly Kraken EVP Defence)
• Joe Mackay – Chief Financial Officer (CFO)
• Terra Penrose – Chief People Officer (CPO)
• John Salama – Chief Information Officer (CIO)
• Andrew Griffin – Chief Legal Officer (CLO) (formerly Kraken Director, Legal)

The Executive Leadership Team working with Bernard within the Kraken Robotics operating business will include:

• Simon Partridge – EVP Technology (formerly Chairman of Covelya Group)
• Graham Brown – EVP Products (previously Managing Director at Covelya Group’s Sonardyne International subsidiary)
• Gary Moynehan – EVP Enterprise Performance (previously CFO at Covelya Group)
• David Shea – EVP Strategy & Growth (previously EVP Products and CTO at Kraken)
• EVP Systems & Services, a newly created position that is currently vacant, with the Company in advanced stages of the recruitment process

Nat Spencer, Chief Operations Officer (COO), will be leaving Kraken at the end of July to pursue a new opportunity. 

Kraken is establishing an integration plan with a dedicated team and will begin integrating employees, systems, finance, sales, and operations to realize potential revenue and cost synergies. As previously announced, Kraken is targeting approximately $10 million of cost synergies within the first 24 months.

CLOSING DETAILS AND SUBSCRIPTION RECEIPT CONVERSION

The approximately $615 million purchase price for the Acquisition, prior to closing adjustments, was comprised of approximately $480 million in cash and approximately $135 million through the issuance of 15,882,352 common shares of Kraken (each a “Common Share”) at a deemed issue price of $8.50 per Common Share to Covelya Group’s shareholder.

The cash portion of the purchase price was funded from the net proceeds of Kraken’s $402.5 million bought deal public offering of subscription receipts (the “Subscription Receipts”), which closed on March 12, 2026, interest earned on such net proceeds, and borrowings under the New Credit Facility.

In connection with the closing of the Acquisition, Kraken also closed amendments to its existing credit facility to create a new committed, secured, non-revolving term credit facility in the amount of $125 million (the “New Credit Facility”), increase its existing revolving credit facility from $35 million to $60 million, and to extend the term of the revolving credit facility to March 2031, among other amendments. The Company drew down the New Credit Facility in full, with the proceeds applied to pay a portion of the cash consideration for the Acquisition.

In conjunction with the closing of the Acquisition, each holder of Subscription Receipts is entitled to receive, automatically and without payment of any additional consideration or further action on the part of the holder, one Common Share for each Subscription Receipt held.

Trading in the Subscription Receipts is expected to be halted, the transfer register maintained by the subscription receipt agent will be closed, and the Subscription Receipts will be delisted from the TSX Venture Exchange (TSXV) effective as of the close of trading today. The Common Shares to be issued pursuant to the terms of the Subscription Receipts are expected to commence trading on the TSXV tomorrow.

After giving effect to the Acquisition and the offering of the Subscription Receipts, the seller of Covelya Group owns approximately 4% of the issued and outstanding Common Shares, which are subject to a lock-up agreement providing for release one-third of such Common Shares on each of the dates that are 12, 18 and 24 months following the closing date of the Acquisition.

Kraken plans to report its Q2 2026 results in late August 2026 and its Q3 2026 results, which will include Covelya’s contribution, in late November 2026. With the Acquisition now complete, Kraken intends to apply to list its Common Shares on the Toronto Stock Exchange (TSX), subject to satisfying applicable TSX listing requirements and receiving TSX approval. The Company expects the process to be completed by year-end 2026 or early 2027.