Shares of Kraken Robotics surged 8% to $6.76 as investors continued absorbing the aftershocks of the company's largest-ever deal. Kraken finalized its CA$615 million acquisition of U.K.-based Covelya Group on July 2, aiming to broaden its geographic reach, deepen defense ties, and achieve CA$10 million in cost synergies within 24 months. No fresh headlines dropped today — this is pure digestion of a company that just nearly tripled its revenue outlook overnight.
A CA$615 Million Price Tag Funded Mostly With Cash — and Debt
The purchase price consisted of approximately $480 million in cash and $135 million through the issuance of 15.9 million shares at $8.50 per share.
The cash came from Kraken's $402.5 million public offering of subscription receipts and borrowings under a new $125 million credit facility. That's significant leverage for a company that reported just $21.7 million in Q1 revenue. Management insists it maintains a strong balance sheet with minimal net debt and financial flexibility to fund future growth. Shareholders should watch debt service costs closely.
Guidance Nearly Doubled, But Half the Year Is Already Gone
Kraken now expects 2026 revenue of CA$290–$320 million, up from the prior standalone range of CA$165–$175 million.
Adjusted EBITDA — essentially operating profit before certain accounting charges — was raised to $65–$75 million. The catch: Covelya's contributions only count from July 2 onward, with revenue expected to be weighted toward the second half. That back-end loading means execution risk is concentrated in the final two quarters.
Order Books Paint a Compelling Picture
Combined announced orders in 2026 total approximately $110 million for Kraken and $182 million for Covelya Group — roughly CA$292 million combined, already within the new guidance range. Since Q1 results in May, Kraken and Covelya secured additional product orders of approximately CA$13 million and CA$17 million, respectively.
Gross profit margins on these orders are consistent with historical levels , suggesting the growth isn't coming at the expense of profitability.
Defense Spending Tailwinds Are Real — But Integration Is the Wild Card
Covelya's subsidiaries design, manufacture, and support high-performance underwater technology for both defense and commercial clients.
Kraken expects low-to-mid double-digit earnings-per-share growth in 2027 from the deal , but that projection assumes the promised synergies materialize on schedule. The combined entity posted $365 million in revenue in 2025 , meaning Kraken must now manage an organization multiple times its pre-deal size — a challenge that has tripped up far larger acquirers.