Nukkleus Expands Its Focus on the Defense Sector, Strengthens Capital Structure as it takes Initial Steps Toward Star 26 Acquisition

Rhea-AI Summary

Nukkleus (NASDAQ: NUKK) has submitted a preliminary proxy to the SEC regarding its proposed acquisition of Star 26 Capital Inc. The company has enhanced its financial flexibility by reducing liabilities and terminating burdensome agreements, freeing up an additional $5 million for defense assets. Nukkleus has also filed a Form S-1 registration statement for a recent $10 million private placement.

Star 26 Capital, the acquisition target, owns 95% of Rimon, a key supplier of components for military systems including Israel's Iron Dome. The acquisition aligns with Nukkleus' strategic shift toward the defense sector, aiming to create an ecosystem of defense, industrial, and technology companies. Star 26 specializes in identifying and revitalizing undervalued businesses through strategic restructuring.

According to CEO Menny Shalom, the company has experienced increased investor interest since announcing the Star 26 acquisition and is actively exploring additional opportunities in line with its turnaround-focused investment model.

Positive

• Secured $10 million through private placement
• Additional $5 million freed up for defense assets
• Acquisition target owns 95% stake in military supplier Rimon
• Increased investor interest reported since Star 26 announcement
• Reduction in financial liabilities improving capital structure

Negative

• Potential shareholder dilution from new share issuance
• Acquisition still pending shareholder approval

Insights

M&A and Corporate Strategy Analyst

This strategic transformation represents a pivotal moment for Nukkleus, with several critical developments that warrant careful analysis. The company is executing a multi-faceted approach to strengthen its position in the defense sector, backed by significant financial restructuring.

The financial restructuring is particularly noteworthy, with $15 million in total capital being positioned for deployment ($10 million from private placement and $5 million from liability reduction). This represents approximately 16.4% of Nukkleus' current market capitalization, indicating a substantial commitment to this strategic pivot. The termination of burdensome agreements suggests management's focus on optimizing capital allocation for the defense sector transition.

Star 26's 95% ownership of Rimon presents a compelling strategic asset. Rimon's role in supplying components for the Iron Dome system is particularly significant, as it provides:

• Established credentials in mission-critical defense systems
• Existing relationships with major defense contractors
• Potential for technology transfer and expansion into other defense programs

The transaction structure, utilizing Star 26 as an acquisition platform, indicates a sophisticated approach to market entry. This model could enable Nukkleus to:

• Leverage Star 26's expertise in identifying undervalued assets
• Implement operational improvements across acquired companies
• Create synergies within a defense-focused portfolio

However, several critical factors require attention:

• Defense sector acquisitions often face heightened regulatory scrutiny, particularly regarding foreign ownership and national security considerations
• Integration of defense-focused acquisitions requires specialized expertise and security clearances
• The transition from Nukkleus' previous business model to defense operations presents execution risks

The submission of both the preliminary proxy and Form S-1 registration statement indicates progress toward deal completion, though shareholder approval remains a key milestone. The market's positive reception since the initial announcement suggests investor alignment with this strategic direction, though the transformation's success will ultimately depend on effective execution of the acquisition strategy and operational improvements at target companies.

NEW YORK, Feb. 13, 2025 /PRNewswire/ -- Nukkleus Inc. (NASDAQ: NUKK) continues to advance its strategic realignment toward the defense sector, announcing that it has formally submitted a preliminary proxy to the Securities and Exchange Commission with respect to the proposed acquisition of Star 26 Capital Inc.. This milestone follows the company's strong market momentum since the announcement of the proposed Star 26 transaction, underscoring investor confidence in Nukkleus' expansion strategy.

This move is further supported by enhanced financial flexibility, achieved through the reduction of liabilities and the termination of agreements that placed a financial burden on the company, freeing up a significant amount of capital, allowing for a more streamlined capital structure and enabling the company to allocate another $5 million more effectively toward high-growth defense assets.

Nukkleus has also submitted a Form S-1 registration statement registering for resale the shares of common stock issued or issuable in connetion with its recent  $10 million private placement which further reinforced its financial foundation for the Star 26 acquisition and future expansion.

Star 26 and Rimon: Driving Strategic Expansion

Star 26 Capital Inc. is an acquisition-focused entity designed to identify and revitalize undervalued businesses by implementing strategic restructuring and operational improvements. Star 26 focuses on creating a strategic ecosystem of interconnected companies within the defense, industrial, and technology sectors, fostering synergy and innovation across its portfolio.

As part of its core holdings, Star 26 owns a 95% stake in Rimon, a specialized supplier providing critical components for advanced military systems, including Israel's Iron Dome. Through its restructuring expertise, Star 26 aims to enhance Rimon's operational efficiency and market reach, allowing it to better serve defense and aerospace clients while expanding its technological capabilities.

By integrating Star 26 into its broader corporate strategy, Nukkleus is seeking to execute value-driven acquisitions in emerging markets, including defense-related technologies.

Momentum for Expansion and Additional Acquisitions

Since the initial announcement of the proposed Star 26 acquisition, Nukkleus has experienced increased investor interest, further reinforcing its commitment to scaling its acquisition strategy. In addition to finalizing this transaction, Star 26 is actively exploring additional opportunities, seeking companies that align with its turnaround-focused investment model.

Strategic Positioning for Long-Term Growth

"Star 26 represents a unique approach to acquisition and value creation," said Menny Shalom, CEO of Nukkleus. "Rather than simply acquiring businesses, Star 26 specializes in restructuring and revitalizing companies with strong potential. With the goal of integrating Star 26 into our corporate portfolio, we are leveraging its expertise in business transformation to drive long-term growth. The additional financial flexibility we have created, combined with the new capital inflows, places us in a strong position to execute our strategy effectively."

While we continue to take steps with the goal of obtaining shareholder approval of the Star acquisition, Nukkleus remains focused on accelerating its transformation and expanding its portfolio of high-value businesses.

About Nukkleus Inc.

Nukkleus, Inc. (NASDAQ: NUKK) is a Nasdaq company focused on innovative acquisition companies specializing in identifying, acquiring, and transforming high-potential businesses across key sectors, including defense, financial services, real estate, industrial, and technology. Focused on driving growth, innovation, and operational excellence, Nukkleus combines strategic investments with unparalleled expertise to foster collaboration and sustainable value creation. By leveraging market insights and advanced solutions, the company accelerates growth and ensures long-term success for its portfolio businesses, reshaping industries and delivering measurable returns for stakeholders.

Forward-Looking Statements

This press release contains forward-looking statements. All statements other than statements of historical facts are "forward-looking statements" within the meaning of federal securities laws. In some cases, you can identify forward-looking statements by terminology such as "will," "would," "expect," "intend," "plan," "objective," or comparable terminology referencing future events, conditions or circumstances, or the negative of such terms. Although Nukkleus believes that it has a reasonable basis for the forward-looking statements contained in this press release, they are based on management's current beliefs and expectations about future events and circumstances and are subject to risks and uncertainties, all of which are difficult to predict and many of which are beyond the Company's control. Risk factors described under "Risk Factors" in Nukkleus' most recently filed annual report on Form 10-K, as updated from time to time in its quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission, may cause actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements in this press release. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they were made. Nukkleus undertakes no obligation to update any forward-looking statement contained in this press release to reflect events that occur or circumstances that exist after the date of this press release, except as required by law

For more information, please contact:

YAIR OHAYON
CMO
Email: y@nukk.com

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SOURCE Nukkleus Inc.

FAQ

What is the value of Nukkleus' (NUKK) recent private placement?

Nukkleus completed a $10 million private placement, with shares being registered for resale through a Form S-1 registration statement.

How much additional capital has NUKK freed up for defense assets?

Nukkleus has freed up $5 million in additional capital for defense assets through the reduction of liabilities and termination of burdensome agreements.

What percentage of Rimon does Star 26 Capital own?

Star 26 Capital owns a 95% stake in Rimon, a supplier of components for military systems including Israel's Iron Dome.

What regulatory filings has NUKK submitted for the Star 26 acquisition?

Nukkleus has submitted a preliminary proxy to the SEC regarding the proposed acquisition of Star 26 Capital Inc.

What is Star 26's main business strategy that NUKK is acquiring?

Star 26 specializes in identifying and revitalizing undervalued businesses through strategic restructuring, focusing on defense, industrial, and technology sectors.