St. John's-based Kraken Robotics said Wednesday it has inked a deal to raise $10 million by selling shares to a consortium of underwriters led by investment bank Canaccord Genuity Corp. It will also buy another Newfoundland and Labrador company, PanGeo Subsea, in a cash and stock deal worth more than $14 million.

Kraken shares, which trade on the TSX Venture exchange, fell more than 17 percent on the news to 48 cents. The stock has been in steady decline since mid-February, when it traded for 99 cents, but its market capitalization is still more than $81 million.

Kraken manufactures unmanned submarines and sonar equipment. PanGeo Subsea, which has offices in St. John's and Aberdeen, Saskatchewan, specializes in seafloor imaging. Kraken said in a press release the deal will help the company grow its product offering and more quickly expand into new markets.

“Completion of the PanGeo Transaction will significantly accelerate the company’s vertical move into the provision of offshore survey and inspection services using Kraken technology as part of a robotics/data as a service business model,” said Kraken in the statement.

“The PanGeo transaction will also increase Kraken’s exposure to the non-defense market, including the offshore renewable energy market (PanGeo’s largest market), which will help to diversify its client base.”

The funding raise will take the form of a “bought deal” -- an agreement whereby shares are sold to investment banks, which then resell them to other buyers.

The PanGeo acquisition will require Kraken to pay $3 million in cash and $7 million worth of shares immediately, and $4 million -- plus six percent annual interest -- two years after the deal closes.

Kraken CEO Karl Kenny told trade publication InvestorsObserver that PanGeo’s technology will help his team accelerate development of its OceanVision platform, which will let customers scan the seafloor and upload the results to a cloud storage system.

In 2019, OceanVision became the first project to receive funding from Canada’s Ocean Supercluster, when Kraken and its research and development partners entered into a $20 million deal, including $5.9 million from the supercluster.

PanGeo is also working on a $420,000 Ocean Supercluster project to increase diversity in the ocean technology sector.