St. John’s-based Kraken Robotics Inc. has agreed to acquire British underwater-tech company Covelya Group for $615 million in cash and stock.

Announced late last week, the deal combines two providers of subsea technology serving defence and commercial maritime markets, with the goal of offering a greater range of mission-critical products in more geographic markets.

The purchase price includes $480 million in cash and $135 million in Kraken common shares issued to the seller, Sonardyne Holdings. To help finance the cash component, publicly listed Kraken will raise about $350 million by selling stock.

“Strategically, this acquisition will provide a unique opportunity to combine two leading subsea technology providers with complementary products, operating in markets with barriers to entry and high growth potential,” said Kraken CEO Greg Reid in a statement.

“The combined company will be able to provide more integrated solutions of mission-critical systems for underwater platforms and subsea sensors/monitoring systems. These key technology systems include Kraken’s subsea batteries and synthetic aperture sonar and Covelya Group’s subsea navigation, positioning, and communications offering.”

Covelya Group operates several underwater technology companies, including Sonardyne International, EIVA A/S, Forcys, Wavefront Systems, Voyis Imaging Inc. and Chelsea Technologies. The group designs and manufactures systems used for underwater navigation, communication, positioning, imaging and monitoring for uncrewed maritime platforms and surface vessels.

Covelya, which employs nearly 750 people and operates 12 facilities across North America, South America, Europe and the Asia-Pacific region, is expected to report 2025 revenue of between $249 million and $275 million. The business has recorded revenue growth of about 24 percent annually since 2023.

Combined with Kraken’s operations, the companies estimate total 2025 revenue of between $351 million and $379 million and an adjusted EBITDA margin of about 24 percent.

Kraken said the acquisition expands its product portfolio and customer base in subsea technology, particularly in defence and maritime surveillance markets where demand for autonomous underwater systems is increasing. The combined company will offer integrated systems that include Kraken’s subsea batteries and synthetic aperture sonar alongside Covelya’s navigation, positioning and communication technologies.

The acquisition is expected to add to earnings per share beginning in 2027 and to increase revenue, EBITDA and cash flow per share. Kraken is targeting about $10 million in savings within 24 months through supply chain integration, research and development coordination and administrative efficiencies.

Following completion of the transaction, the seller will hold about 4 percent of Kraken’s outstanding shares on a pro forma basis. The shares will be subject to a staged lock-up over two years.

Kraken expects the acquisition to close in the second quarter of 2026, subject to regulatory approvals.

Kraken shares on the TSX Venture exchange fell 5.2 percent Friday to $8.36, according to Google. However, they are still near an all-time peak, having risen 287 percent in the past year. The company now has a market capitalization (the total value of its shares) of $2.6 billion.