8-K: Ondas Holdings Acquires Majority Stake in Precision Optics Firm SPO

Ondas Holdings Inc. entered a definitive agreement to acquire a controlling 51% interest in S.P.O. Smart Precision Optics LTD., a premier manufacturer of advanced precision optical components and systems.

Summary

• Ondas Holdings Inc. (Ondas) has entered into an agreement to acquire a controlling 51% interest in Smart Precision Optics S.P.O LTD. (SPO), an Israeli manufacturer of advanced precision optical components and systems.
• The acquisition involves an initial payment of NIS 20,000,000 (approximately US$5,946,805) in cash for 51% of SPO's share capital and NIS 1.00 (approximately US$0.30) for 51% of SPO's outstanding capital notes, which have an aggregate balance of approximately NIS 71,000,000 (approximately US$21,111,160).
• A contingent consideration of 10% of any Qualified Grants received by SPO between the closing date and December 31, 2026, will be paid to Shamir Investment Entrepreneurship ACS LTD. (Shamir), up to a maximum of NIS 4,000,000 (approximately US$1,189,361) for NIS 40,000,000 in grants.
• Ondas will have the option to pay the contingent consideration in cash or shares of its common stock.
• Shamir, the current owner of SPO, retains put options for its remaining 49% stake, exercisable under specific conditions, and Ondas holds a call option to acquire the remaining shares at a valuation of NIS 200,000,000 (approximately US$59,468,058).
• The acquisition is expected to close in the third quarter of 2025, subject to regulatory approvals and other closing conditions.

Sentiment

Score: 8

Explanation: The acquisition is a highly strategic move for Ondas, expanding its capabilities into a critical and high-growth defense technology sector. The press release and agreement highlight significant market opportunities and SPO's unique position as a key supplier. While there are future financial obligations and potential for dilution, the overall strategic rationale and potential for growth are strong.

Positives

• The acquisition expands Ondas's core capabilities in advanced electro-optics, bringing world-class expertise in high-end precision optics processing and proprietary optical coatings.
• SPO is a critical supplier to Israeli defense corporations, supporting systems like missile defense and counter-drone technologies, which aligns with Ondas's strategic growth in advanced defense technologies.
• The transaction is expected to enable Ondas to support critical optical performance required in missile defense and counter-drone systems worldwide.
• The total addressable market (TAM) for Precision Optics was nearly $29 billion in 2025, with the High Precision Optics market sized at $3.3 billion, indicating significant growth potential.
• Ondas intends to expand SPO's scale and pursue global opportunities, playing a leading role in supporting U.S., Israeli, and allied defense customers.

Negatives

• The acquisition involves complex future financial obligations through contingent consideration and put/call options, which could introduce uncertainty regarding future cash outflows or stock dilution.
• The First Put Option for Shamir to sell its remaining stake is subject to conditions, including Ondas's stock closing price being higher than at the acquisition's closing, which could be a hurdle if Ondas's stock underperforms.
• Transaction expenses for SPO are capped at $50,000 plus VAT (excluding finder fees), which could be a minor financial strain on SPO prior to closing.

Risks

• The completion of the acquisition is subject to various closing conditions, including requisite regulatory approvals and the absence of prohibitive legal orders or laws.
• Forward-looking statements are subject to risks, uncertainties, and assumptions that are difficult to predict, and actual results could differ materially.
• The First Put Option for Shamir is conditional on no material deterioration of SPO's business, Ondas's stock price being higher than at closing, and no limitations on Ondas issuing new shares, any of which could prevent its exercise.
• Integration risks associated with combining SPO's operations and culture with Ondas's existing business units could impact expected synergies and performance.
• Potential for stock dilution if Ondas chooses to pay contingent consideration or exercise put options using its common stock.

Future Outlook

Ondas intends to expand SPO's scale, pursue global opportunities, and play a leading role in supporting U.S., Israeli, and allied defense customers. The acquisition is expected to enable critical capabilities for missile defense, high-power lasers, and advanced counter-drone systems. The closing of the acquisition is anticipated in the third quarter of 2025.

Management Comments

• Eric Brock, Chairman and CEO of Ondas Holdings, stated: 'The acquisition of S.P.O. Smart Precision Optics will represent a major step in strengthening Ondas leadership in advanced defense technologies. Precision optics are the heart of electro-optical systems, and SPO’s expertise and infrastructure is expected to give us an unparalleled ability to support the critical optical performance required in missile defense and counter-drone systems worldwide. Together, we intend to expand SPO’s scale, pursue global opportunities, and play a leading role in supporting U.S., Israeli, and allied defense customers.'
• Oshri Lugassy, Co-CEO of Ondas Autonomous Systems, commented: 'SPO is more than a supplier; it’s a strategic asset for national defense and a unique global player in precision optics. By combining SPO’s heritage and know-how with Ondas’ expanding global operating platform, we expect to enable critical capabilities for missile defense, high-power lasers, and advanced counter-drone systems that are essential to the defense of populations, forces, and critical infrastructure.'

Industry Context

The acquisition positions Ondas to capitalize on the growing Precision Optics market, which was nearly $29 billion in 2025, with the High Precision Optics segment valued at $3.3 billion. SPO is recognized as a critical supplier to Israeli defense corporations and is part of a select global group capable of delivering military-grade precision optics. This move enhances Ondas's existing autonomous drone and private wireless solutions by integrating advanced electro-optical capabilities, crucial for modern defense and security systems like missile defense and counter-drone technologies.

Comparison to Industry Standards

• SPO is described as part of a 'select global group of companies' with the infrastructure and know-how to deliver highly complex, military-grade optics, indicating a high standard of capability.
• SPO has earned recognition as a 'critical supplier' to Israeli defense corporations, demonstrating its strategic importance and proven performance in the defense sector.
• The company's capabilities span optical design, CNC processing, polishing, metrology, cement, and cementing, allowing for end-to-end solutions from raw material to finished assemblies, which is a comprehensive offering in the precision optics industry.

Management Changes

Corporate Governance

Related Party Transactions

• Shamir Investment Entrepreneurship ACS LTD. (Shamir), the seller, is an agricultural cooperative society organized under the laws of the State of Israel and the current 100% owner of SPO (except for a minority shareholder).
• Shamir holds approximately NIS 71,000,000 in Capital Notes issued by SPO against investments.
• A lease agreement exists between Shamir and SPO, which will be amended to prevent termination until the end of calendar year 2030.
• Shamir has provided personal guarantees in connection with SPO's bank accounts.
• Non-compete and non-solicitation covenants are imposed on Shamir for a period following the acquisition.
• The Company will make offers of employment to up to 10 members of Kibbutz Shamir (affiliated with Shamir) who are currently involved in SPO's operations.

Stakeholder Impact

• Shareholders (Ondas): Potential for significant growth and expansion into a critical defense technology market, but also potential for future stock dilution if common stock is used for contingent payments or put options.
• Employees (SPO): New employment offers for Kibbutz Shamir members and a new CEO to be appointed, indicating potential changes in leadership and operational structure.
• Customers (SPO): Expected to benefit from expanded scale and global opportunities, with continued support for critical defense and security systems.
• Shamir Investment Entrepreneurship ACS LTD.: Receives initial cash consideration and potential future payments (cash or stock) for its remaining stake, subject to put options and contingent consideration, while also being subject to non-compete and non-solicitation clauses.

Next Steps

• The acquisition is expected to close in the third quarter of 2025, subject to the satisfaction or waiver of closing conditions, including regulatory approvals.
• Ondas will cause the shares of Ondas Registrable Securities, if and when issued, to be approved for listing on Nasdaq.
• A new Chief Executive Officer for SPO is to be appointed within 90 days from the Closing Date, with Shai Spiegler remaining CEO until then.
• The Company will make offers of employment to up to 10 members of Kibbutz Shamir currently involved in SPO's operations.
• Following the Closing, SPO and the parties will cooperate to ensure all employees and consultants are subject to customary employment/service agreements, including confidentiality, IP assignment, non-compete, and non-solicitation undertakings.

Key Dates

Recommendation

The acquisition of SPO is a highly strategic and transformative move for Ondas, significantly enhancing its capabilities in the critical and rapidly growing defense technology sector, particularly in precision optics for missile defense and counter-drone systems. SPO's established position as a 'critical supplier' to Israeli defense and its unique expertise provide a strong foundation for future growth and market penetration. While the financial structure includes future obligations and potential for stock-based payments, the strategic rationale for expanding into a high-demand, high-margin area with significant total addressable market potential outweighs these complexities. This acquisition aligns with Ondas's stated growth strategy and positions the company for long-term value creation, making it an attractive investment opportunity.

Keywords

Ondas Holdings, SPO, Smart Precision Optics, acquisition, defense technology, electro-optics, drones, private wireless, Israel, precision optics, missile defense, counter-drone systems, NASDAQ, optical components