Special Report: The merged entity, Delta Drone International, will be well-placed to capitalise on commercial opportunities across multiple global markets.

ASX-listed drone safety company ParaZero (ASX:PRZ) has announced a strategic international merger as it looks to build market share with an Australian-based ‘drones-as-a-service’ business

The company will join forces with international drone services provider Delta Drone South Africa to broaden its product offering and expand its target market into new regions.

The merged entity is set to relist on the ASX as Delta Drone International (ASX:DLT).

DLT will initially target opportunities in Australian sectors across mining, agriculture and oil & gas – an addressable domestic market in 2020 of around $277 million, or $US486 million globally.

Multi-channel opportunity

Delta Drone is already an established player in this market, providing international drone services and tech solutions for the mining, agricultural and engineering industries.

In the mining sector, Delta Drone provides aerial surveying and mapping, security and surveillance, and blast monitoring and fragment analysis with operations in South Africa, Ghana and Namibia.

Its customers include BHP spin-off, South 32, and the world’s largest gold miner, Newmont Mining.

Delta Drone is already a profitable business, producing $3 million in revenue in the 2019 calendar year, with historical annual revenue growth of 40 per cent.

Based in Israel, ParaZero’s industry-leading drone safety technology systems are increasingly being used for drone deliveries, drone flights for crowd monitoring and in urban areas, as well as ‘beyond visual line of sight’ (BVLOS) missions.

Its tech has been used to secure more than 100 FAA waivers by commercial drone operators for flight over people and beyond visual line of sight – an achievement the company says is a global first.

And its product range has recently been expanded, to include heavy-lift drones for the mining and construction sectors, which will support its focus on these industries.

The merged entity will be headquartered in Australia and led by current Delta Drone South Africa CEO Chris Clark.

Clark said there are many synergies between the two companies, with complementary products and services providing a competitive edge within the mining and agriculture markets.

“While both companies have previously focused on international operations, the merged entity will be looking much closer to home where there are significant market opportunities for our industry-leading drone services and safety technology,” Clark said.

“We already have an established business and product offering in Southern Africa, with sophisticated end-to-end drone services for the mining and agriculture industries.”

“Our expansion into Australia will provide immediate revenue and growth opportunities for Delta Drone International, while ParaZero’s drone safety tech provides long-term growth opportunities as urban drone delivery increases globally,” Clark said.

In this market, ParaZero’s drone safety solutions are already being used for many drone delivery firsts, including in Canada, Israel and Brazil, where its drone parachutes are assisting with urgent medical drone deliveries.

“Australia’s large agriculture sector is another focus for Delta Drone International, where our drone solutions include plant population, weed and plant disease analysis, yield estimation and drought analysis,” Clark said.

To fund the merger, ParaZero is in talks with investors to raise up to $5 million at 4c a share through lead manager Baker Young Limited in Adelaide.

The company has been meeting with brokers and fund managers over the past few weeks. and has already secured a cornerstone commitment of more than half the target amount from a European-based Family Office with experience in drone industry investments.

Executive Chairman of Delta Drone International, and current CEO of ParaZero, Eden Attias, said the merger delivers value for existing shareholders with significant short and long-term growth opportunities across a broad range of industries.

“The merged entity will leverage ParaZero’s existing technology expertise to deepen and complement Delta Drone’s suite of services for current and future target markets. The combined technologies allow the realisation of regular commercial drone services in urban and populated environments, which until now have either been banned or highly restricted by aviation regulators.”

Funds raised will be used to build out the technology and infrastructure for DLT’s expansion into the drones-as-a-service Australian market, as well as domestic sales & marketing support.

It will also deploy capital to fund its expanding operations in South Africa, along with additional R&D spending in Australia and Israel.

This article was developed in collaboration with ParaZero, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.