Axon Puts $1.2 Billion Into Skydio

SCOTTSDALE, Ariz., Nov. 5 — Axon,Axon, the maker of Taser devices and police body cameras, said on Thursday that it would put about $1.2 billion into Skydio, the drone maker, at a $5.2 billion valuation before the money, and become its exclusive distributor to public-safety agencies in the United States and Canada.

The investment is expected to increase Axon’s stake from about 15 percent as of Sept. 30 to about 37 percent, fully diluted, according to its filing with the Securities and Exchange Commission, and most of it buys shares from Skydio’s holders rather than putting new money into Skydio. Axon is buying non-voting stock, and Skydio stays independent.SkydioFounded in 2014 and based in San Mateo, Calif., Skydio describes itself as the largest U.S.-based drone manufacturer. It says its systems are used by every branch of the U.S. military and the armed forces of 32 allied nations.

Of the 120 million Skydio shares Axon aims to buy at $10.19617 apiece, about $1.22 billion in all, 25 million are new shares Skydio sold it on Thursday for about $254.9 million, to be paid half in cash and half in Axon stock. The rest Axon will buy from Skydio’s holders, through a tender offer and private sales, in deals it expects to close in the fourth quarter and the first quarter of 2027. About 60 percent of the total, roughly $720 million, is to be paid in cash, the filing says.A Cap on New SharesThe Axon stock issued across the deal may not exceed 19.99 percent of Axon’s shares outstanding before Thursday’s closing; anything over the cap is paid in cash, the filing says.

Adam Bry, Skydio’s chief executive, put it plainly on LinkedIn. “Skydio didn’t need the money, so this is mostly going to provide liquidity for existing shareholders and employees,” he wrote. The two companies had weighed a full takeover: “Both companies seriously considered doing it,” Mr. Bry wrote. “But we came to believe we can both be most useful to the world as independent companies.”

What Axon gets is the channel. It estimates the market for what it calls Drone as First Responder, drones sent to emergency calls ahead of officers, at about $13 billion in the United States and Canada alone. Skydio serves more than 1,500 public-safety customers, and more than 28 million Americans live within two miles of one of its docks, Axon said; Skydio expects about $1 billion of bookings in its current fiscal year. Skydio becomes the only drone Axon sells in those markets, Mr. Bry wrote, and Axon will record the sales on a net basis, which it calls “pure-margin revenue.”

The deal came with Axon’s third-quarter results, filed after Thursday’s close. Revenue rose 28 percent, to $909 million, but Axon cut its forecast for 2026 growth to about 30 percent, from 32 to 34 percent, after dropping some $130 million of revenue it had expected from three federal deployments of Dedrone, its airspace-security business. Axon’s shares, which had fallen 9.81 percent in Thursday’s session, fell a further 18.18 percent on Friday, to $313.00, and ended the week 26.83 percent lower.

Next comes the tender offer, which Axon says it will open within ten business days of Thursday, for up to 68,451,508 more Skydio shares.