EOS Enters Agreement to Acquire MARSS, Expanding Counter-Drone Capability

About Electro Optic Systems Holding Limited

Electro Optic Systems Holdings Limited (ASX: EOS) is an Australian-based defence and space technology company specialising in advanced remote weapon systems, counter-drone solutions, command-and-control capabilities and space domain awareness. Headquartered in Canberra and listed on the ASX, EOS operates across two core divisions: Defence Systems and Space Systems. Its products are deployed by military and security customers globally, supporting land-based combat vehicles, critical infrastructure protection and increasingly complex threat environments.

Over the past decade, EOS has built a strong reputation as a supplier of high-performance sensors, effectors and remote weapon systems. However, the rapid evolution of asymmetric threats particularly the proliferation of low-cost, autonomous drones and coordinated drone swarms has shifted the centre of gravity in modern defence toward integrated, software-defined systems capable of rapid decision-making. The acquisition of MARSS represents a decisive step by EOS to address this shift, repositioning the company higher up the defence value chain.

Overview of the MARSS Acquisition

EOS has entered into a binding agreement to acquire the MARSS group business, a defence and security technology company established in 2006 and headquartered in Europe. MARSS specialises in sensor-fusion and AI-enabled command-and-control systems designed primarily for counter-drone applications across military, homeland security and civil markets.

At the centre of MARSS’ offering is its proprietary NiDAR platform, an advanced C2 system that integrates multiple sensors and effectors to detect, identify, prioritise and neutralise drone threats. By acquiring MARSS, EOS gains ownership of this software platform, associated hardware, customer contracts, intellectual property and a team of experienced engineers and developers.

The transaction follows EOS’s earlier acquisition of the MARSS Interceptor business in November 2025 and represents a continuation of EOS’s strategy to assemble a comprehensive counter-drone capability.

Strategic Rationale and Capability Transformation

The acquisition materially transforms EOS’s role in the counter-drone ecosystem. Historically, EOS has supplied best-in-class sensors and effectors, such as remote weapon systems and directed-energy solutions, which are deployed as part of broader defence architectures. With the addition of MARSS’ NiDAR platform, EOS can now offer a complete, integrated solution spanning detection, identification, decision-making and engagement.

NiDAR functions as the digital “brain” of counter-drone operations, fusing data from radars, cameras, acoustic sensors and other inputs into a single operational picture. The platform uses AI-enabled decision support to prioritise threats and orchestrate responses across multiple systems, including autonomous operation in high-density swarm scenarios. This capability is increasingly critical as the speed, scale and complexity of drone attacks exceed the limits of manual human control.

By combining its hardware capabilities with NiDAR’s software-defined C2 layer, EOS is positioning itself as a prime contractor capable of delivering turnkey counter-drone solutions for fixed, mobile and expeditionary environments.

Financial Structure and Earn-Out Alignment

The acquisition is structured as an asset purchase, with total consideration comprising an upfront cash payment and a performance-based earn-out. EOS will pay US$36 million in cash at completion, funded primarily from existing cash reserves, which stood at approximately A$107 million at 31 December 2025.

In addition, MARSS management shareholders may receive earn-out consideration of up to €100 million, payable if new MARSS contract orders totalling €500 million are secured during the earn-out period. Earn-out payments will be made in a combination of EOS shares and limited cash, aligning MARSS leadership with EOS shareholders and incentivising growth in contracted revenue.

Management has indicated that the acquisition is expected to be broadly neutral to earnings and operating cash flow in 2026, reflecting integration and investment costs, with positive earnings contributions expected from 2027 as new contracts convert to revenue.

Strengthening Software, AI and Global Footprint

A central benefit of the acquisition is the significant expansion of EOS’s in-house software and AI development capability. As defence systems become increasingly software-defined, control over the C2 layer is critical to maintaining competitiveness, adaptability and margin quality.

The transaction also expands EOS’s geographic footprint, adding MARSS operations in France and the United Kingdom while strengthening the company’s presence in Europe and the Middle East. These regions represent priority growth markets for counter-drone systems, particularly for critical infrastructure protection, border security and homeland defence.

MARSS’ existing customer relationships across military, civil aviation and infrastructure sectors provide EOS with broader end-market access beyond traditional defence programs.

Industry Context: Counter-Drone Demand Accelerates

The acquisition occurs amid accelerating global demand for counter-drone solutions. Conflicts in recent years have demonstrated the effectiveness of low-cost drones in reconnaissance, strike and swarm roles, prompting urgent investment by governments and infrastructure operators in layered defence systems.

Counter-drone capabilities are now required not only by military forces but also by airports, ports, power plants and other critical infrastructure operators. These environments demand scalable, autonomous and highly reliable systems capable of operating continuously with minimal human intervention precisely the use cases targeted by integrated C2 platforms such as NiDAR.

EOS’s move to combine hardware, software and AI reflects a broader industry trend toward vertically integrated defence solution providers.

Outlook

Following completion of the MARSS acquisition, EOS enters 2026 with an expanded addressable market, stronger tender positioning and improved ability to compete for large, multi-year counter-drone programs as a prime contractor. Management has also secured a committed A$100 million two-year term loan facility to provide additional liquidity and flexibility to support growth.

While regulatory approvals and contract execution remain key variables, the strategic logic of the acquisition positions EOS at the forefront of counter-drone system integration as global demand continues to rise.