Ondas seeks to acquire Rafael’s drone maker Aeronautics in expanding Israeli defense blitz
The US-based defense firm aims to expand its Israeli footprint, raising questions about security approvals, executive departures, and Rafael’s broader privatization strategy.
The American company Ondas is seeking to acquire the drone developer and manufacturer Aeronautics from Rafael, Calcalist has learned. Rafael’s board of directors has recently been discussing an offer, the scope of which remains unknown, submitted by Ondas to acquire its subsidiary, which is involved in classified security projects for the IDF and the defense establishment. From the board’s deliberations, it appears that the offer is considered attractive.
Ondas’ attempt to take over Aeronautics joins another deal it is pursuing with Rafael, which is fully government-owned, to acquire control of mPrest, the company that develops the command-and-control software for the Iron Dome air defense system. Calcalist revealed a month ago that Ondas is seeking to purchase, for approximately $100 million, the shares held by investors in mPrest, including CEO and founder Natan Barak, the OurCrowd fund and other entities, at a valuation exceeding $200 million. Rafael is currently the largest shareholder in mPrest, and if the deal goes through, it would become a minority shareholder.
Approval of that deal has been delayed for several months due to a review by the Director of Security of the Defense Establishment regarding the protection of classified defense knowledge. This comes as Ondas is also reportedly interested in acquiring Controp, a second-tier subsidiary of Rafael and a subsidiary of Aeronautics, which operates in the field of electro-optical systems for unmanned aerial vehicles.
Security sources told Calcalist that, similar to the mPrest deal, which is considered highly sensitive, any sale of Aeronautics would also require approval from the Director of Security due to the company’s classified know-how and involvement in secret defense projects. One of Aeronautics’ sensitive programs is called “Storm Clouds,” under which it supplies the Air Force and the Intelligence Directorate with Orbiter 4 UAVs, known in the IDF as “Nitzoz” (“Spark”).
Ondas is a U.S.-registered holding company traded on Nasdaq that, in the wake of the October 7 war, has aggressively expanded into the Israeli defense market. It has acquired nine Israeli defense companies to date for a total of approximately $400 million. In January, it reported a massive capital raise of about $1 billion from a major investor whose identity it has declined to disclose. The lack of transparency regarding the investor has raised questions within the defense establishment and is reportedly being examined by the Director of Security, which has yet to approve the mPrest transaction.
Ondas’ acquisition drive extends beyond Rafael’s subsidiaries and includes a notable migration of former senior Rafael executives to its ranks. The most prominent among them is former Rafael CEO Maj. Gen. (res.) Yoav Har-Even, who now serves on Ondas’ advisory committee. Also joining is Brig. Gen. (res.) Oshri Lugassy, who now manages Ondas’ operations in Israel and previously served as chief engineering officer in the IDF.
Har-Even served as Rafael’s CEO for approximately eight years and led the controversial 2019 acquisition of Aeronautics. A special audit report by the Government Companies Authority, revealed by Calcalist several months ago, found significant deficiencies in that transaction. Rafael acquired Aeronautics for approximately NIS 850 million together with businessman Avichai Stolero, structuring the deal to avoid regulatory constraints applied to government companies. According to the audit, the deal was not economically viable for Rafael, which assumed most of the risk while Stolero profited.
In 2023, four years after the acquisition, Stolero exercised an option allowing him to require Rafael to purchase his stake for approximately NIS 487 million. A Deloitte valuation prior to the sale set a lower value than the 2019 acquisition price, enabling Stolero to recover his full investment, financed through a bank loan, plus interest and financing costs totaling approximately NIS 65 million. Stolero later initiated arbitration over the valuation. The arbitration between Rafael and Stolero is ongoing before retired Judge Itzhak Inbar. Business sources estimate that a high valuation in a potential Ondas offer for Aeronautics could benefit Stolero.
Calcalist has also learned that Moshe Maor-Miara, Rafael’s former VP of Mergers and Acquisitions and one of the architects of the Aeronautics deal, recently joined Ondas. The audit report noted that after leaving Rafael, Maor-Miara served as an external consultant to Stolero-affiliated companies and Rafael subsidiaries, including Aeronautics and Controp, while being paid by a company owned by Stolero.
In addition, several other former Rafael executives have joined Ondas over the past year. Efrat Lazari, until recently chief of staff to Rafael Chairman Yuval Steinitz, joined Ondas as VP of Strategy and is considered Lugassy’s deputy. Former VP of R&D Dr. Irit Iden also moved to Ondas, followed by Dr. Judith Hocherman-Frommer, who succeeded her at Rafael in 2022. Another former senior Rafael official, Shimon Naiman, who oversaw consultants and agents for many years, also recently joined Ondas.
A senior defense industry official told Calcalist: “There are departures everywhere, but in Rafael’s case, these are painful departures. This is a very bad development. Rafael is being penetrated by Ondas. This should concern the IDF, the Government Companies Authority, and Rafael’s leadership.”
He added that regulators should examine cooling-off periods for senior executives exposed to highly classified information, as well as the question of who stands behind Ondas’ funding.
Pressure to promote Rafael IPO
Ondas’ activity comes as the Government Companies Authority is advancing plans for a Rafael IPO, alongside a potential minority share offering in Israel Aerospace Industries. Rafael’s leadership reportedly supports the IPO to prevent competitive disadvantage versus IAI, which would gain access to capital markets.
Potential sales of mPrest, Controp and Aeronautics could affect Rafael’s valuation ahead of an IPO. The Companies Authority estimates Rafael’s potential valuation at approximately NIS 60 billion.
Just a year ago, Ondas faced the risk of Nasdaq delisting due to a prolonged low share price and had operated under a going-concern warning for years. Since then, its valuation has surged to approximately $5 billion following major capital raises totaling nearly $2 billion in 2025.
Its acquisition campaign in Israel has focused on smaller defense companies at relatively high multiples, including Sentrycs ($225 million), Roboteam ($80 million), and Airobotics ($15 million). Questions continue to arise regarding the sources of funding behind this rapid expansion.
Rafael stated that “no request has been brought before the company’s board of directors regarding a decision to sell shares in Aeronautics, and in any case, there are currently no negotiations concerning the sale of Aeronautics shares or Controp shares to Ondas. Any negotiations involving the sale of holdings in defense companies require compliance with strict regulations and approval from the Ministry of Defense and the Government Companies Authority. Rafael has always acted in accordance with these requirements and will continue to do so. About two years ago, Rafael’s board of directors made a principled decision to seek a partner for Controp and sell up to 50% of its shares, but we are still in the early stages of identifying potential bidders.”
Regarding the transfer of senior executives, Rafael stated that “every employee is required to comply with the confidentiality and non-compete agreements they have signed and must act accordingly, and Rafael will ensure that these obligations are upheld. Employee mobility between industries does occur, and we are taking steps to minimize its impact on Rafael.”
Ondas said: “Ondas is working and will continue to work for the security of the State of Israel, including by injecting capital into Israel to strengthen the defense-tech ecosystem. Ondas is a public and fully transparent company, a fact that ensures full credibility and transparency for all of its investors.”
