Today, Summa Defence Oy announced three deals made with share exchanges, so let’s make a separate thread for this. The purpose is to gather several companies critical for security of supply under one group.
"Summa Defence is a Finnish defence and security technology group. We bring together defence industry players and create a new strong growth company in the sector.
Behind our company is a consortium of experienced entrepreneurs who invest in carefully selected target companies, with the aim of increasing their shareholder value and developing their operations. Our goal is to list on the Helsinki Stock Exchange as the first defence and security industry company.
We focus on dual-use technologies
We focus on dual-use technologies that have applications in both civilian and security and defence sectors. Our solutions also support society’s security of supply and provide means for real-time situational awareness, flexible mobility, and effective defence in all conditions."
According to the Chairman of the Board, the goal is to create a group that will generate approximately 130 million euros in revenue and 14–20 million euros in EBITDA next year. The goal is not to seek synergies, meaning a serial acquirer would be brought to the stock exchange.
According to Kauppalehti, the goal is a reverse listing at the beginning of next year. As far as I know, no exact date has been announced.
Jussi Holopainen as CEO, the former CEO of Enersense then. As long as it doesn’t start sprawling in ten different directions again and the profit-making is left behind… The promises are surely great and he’s hyped up himself, but when coming through the back door, it can be difficult to get hold of the real numbers.
Regarding Rush Factory, Kankaala commented that it is not Rush Factory they are going public with. Directly to the main list through someone?
The hype will surely be huge. We know, they know, everyone knows, and that’s exactly what’s scary about this.
Of course, Kankaala cannot admit it quite that directly.
However, AktiiviSijoittajat (Active Investors) took Rush under their wing; it will become Summa.
Here is Kankaala’s statement directly from the press release:
“With this investment, we stabilize the company’s operations and secure the continuation of Rush Factory’s current business. We are interested in exploring and seeking new opportunities for the listed company in new business areas. We are listed company circular economy entrepreneurs” Markku Kankaala, CEO of PM Ruukki Oy
A couple of smaller Finnish defense companies immediately come to mind that would be good to bring under this umbrella. Hopefully, Summa’s leaders have clear steps on how to reach their goals, as the defense industry is not an easy business area for a new company.
Just as a matter of principle, I hope that the state and pension companies do not start pushing money into any business that is not acceptable to private investors. Functions critical for security of supply are a different matter, but in Summa’s case, the intention is likely to buy up subcontractors and start-ups (at the peak of the industry hype, of course) and take management fees in between. Knowing Kankaala’s and Holopainen’s track record, I personally won’t touch this setup.
The Finnish defense and security technology group Summa Defence Oy and IntLog Oy have agreed on a corporate arrangement in which Summa Defence Oy acquires the entire share capital of IntLog Oy through a share exchange. The sellers are Emilia Koivisto and Jukka Pietilä, who will continue in IntLog’s management. Through the arrangement, they will become shareholders of Summa Defence.
IntLog was founded in 2010 to meet the equipment maintenance and outfitting needs of the Finnish Defence Forces and Millog Oy. Today, IntLog’s special containers, mobile modular spaces, and various element solutions provide a flexible solution for the Defence Forces and other authorities for sudden space needs, where the spaces are required to meet a level of almost permanent construction and accommodation. IntLog’s product range today also includes wooden structural space solutions suitable for both civilian and defense sector needs.
The Company Has Plenty of Business, Now Establishing Drone Production
The first drone production facility is a strategic investment, in connection with which Summa Defence Oy is establishing a subsidiary, Summa Drones Oy. Summa Drones, in turn, will establish a joint venture in Finland with its Ukrainian partners, in which Summa Drones will own the majority. Ukrainian drone companies involved include Kort, Elf Systems, Skyassist, and MPS Development. In the future, Summa Drones will manufacture not only aerial drones but also land and sea drones.
Business has been done again.
Turnover 400 kEUR (2023), which is a rather early-stage activity, 25 people
Lightspace is a deep tech company focused on XR technology, i.e., augmented reality (AR) and virtual reality (VR), developing solutions for the defense industry and healthcare sector. Founded in 2014, Lightspace Technologies’ product development and production are located in Latvia. In June 2024, Lightspace and Europe’s leading defense technology company Rheinmetall Electronics UK announced a partnership agreement, under which the companies will jointly develop new augmented reality solutions tailored for the defense and security industry.
Lightspace is a global technology leader in multi-focal AR near-eye displays, which combine augmented reality with an AI interface. The company currently produces AR glasses integrated into the helmets of armored combat vehicle crews, allowing the user to get a 360-degree view, for example, from inside the combat vehicle to the outside, as well as additional information needed for battle or mission command via the AI interface. Lightspace also develops ground station ISR (intelligence, surveillance, reconnaissance) AR glasses, which are used in the operation of military drones. This brings a significant addition to Summa Defence’s overall drone system.
Paywall, but according to the article, the company would consist of 5-6 businesses, and it would go public next year.
Current revenue is 130 million €, and the goal is to reach the 500 million level before 2028.
Recently, several large international banks and financiers have approached Summa hoping for a stake.
My own observation is that future armies will comprise a massive number of, for example, reconnaissance and attack drones. Summa could therefore be involved in a huge growth market.
But once the company is public, what will be the pricing? And can it keep up in the technology race?
I will definitely investigate when the shares become available for sale.
I actually went through these yesterday. So, let’s put the thoughts here as well.
Filtered for under 50M€ market cap, grabbed from Nordnet.
FN notation means on the First North list. Summa Defence is reportedly moving to the main list, which probably won’t have an impact, and the transfer might happen within the same listing process.
The first three on the list + Pallas Air are valuable options as mere shells. Digitalist perhaps too, if something can be divested from its current operations.
Among other listed companies, there is business suitable for Summa’s operating model, i.e., multi-use products. Clearly unsuitable operating models have been filtered out. Still pondering a bit, so feel free to add to it one way or another
Meriaura and Wetteri have been in a reverse process before.
Summa’s board has connections to Enersense, from which something might emerge. For example, some businesses could be sold to Dovre, which has cash from sales.
Reka and Dovre could also function as a “SPAC model,” meaning they have cash that could be used to expand operations.
Of course, there are also companies outside that list whose main operations could be sold off, and their current listing spot taken by Summa Defence. Imagination has seemed to be sufficient before, so there are plenty of options.
"Tommi Malinen, who has a long career in the Finnish Defence Forces and in international sales management positions in the defence industry, has been appointed Sales Director of Summa Defence Oy and a member of its management team.
After his officer career, Malinen has worked as Strategy Director at Valtra Oy, CEO at Kongsberg Defence Oy and Ascom Finland Oy, Sales Director at TietoSaab Systems, and Business Development Director at Elektrobit.
“Tommi Malinen has extensive and deep expertise not only in defence administration and defence industry companies but also in international sales and its successful development. Malinen’s experience and expertise excellently support the international growth of Summa Defence and its portfolio companies,” states Jussi Holopainen, CEO of Summa Defence.
“I am very excited about my new role. Summa Defence is a boldly new kind of player in the Security and Defence field. It is great that an innovative company has emerged in the sector, offering its customers diverse and high-quality technology. In the current global situation, security is a key issue, and in the Summa Defence team, we can work to build a safer society,” says Tommi Malinen."
Background:
According to a previous release, 11.9% of the future publicly listed company Summa Defence Plc will be owned by Meriaura’s current shareholders. With a market value of 52.01 million euros, Summa Defence’s market value is 437.06 million. This feels like a very high valuation based on gut feeling. Was there something else to consider here?
Reflection:
Is this a pure retail investor frenzy phenomenon, or is it expected that we will see plenty of acquisitions this year? So much so that the valuation is justified. As a means of payment, a valuable share is naturally a good tool, and as such enables even large corporate acquisitions.
