UAE's Edge buys majority stake in Estonia's Milrem Robotics

Defence conglomerate Edge has acquired a majority stake in Estonia's Milrem Robotics as it seeks to develop capabilities in robotics and autonomous systems in line with the UAE's expanding manufacturing sector.

The Tallinn-based company — which specialises in the development of intelligent unmanned ground vehicles, robotic warfare, concept of operations and warfare analysis — will become a new entity under Edge's platforms and systems cluster, Edge said in a statement on Tuesday.

The companies did not disclose the value of the deal.

The transaction is “an investment in the future of Edge, which is laser-focused on the development of such capabilities across its multiple domains”, said Faisal Al Bannai, chairman of Edge Group.

The deal will allow both companies to reach their goals in “an increasingly diverse and fiercely competitive market place, to share technology and expertise and to provide Milrem with the necessary support to expand its resources and talent base for further international growth as part of Edge and to also contribute to the growth of Estonia’s sovereign defence industry,” he said.

The move comes as the UAE moves ahead with its Operation 300bn strategy, which seeks to increase the contribution of the local industrial sector to the country's gross domestic product to Dh300 billion ($81.68 billion) by 2031, from Dh133 billion in 2021.

In June 2022, the UAE's Ministry of industry and Advanced Technology, the Emirates Development Bank (EDB) and Edge Group signed an agreement to boost manufacturing in the defence sector.

Under the agreement, EDB will provide financing of up to Dh1 billion to accelerate the industrialisation of Edge’s offerings, while the ministry will support Edge to expand global exports of more than 40 domestically-manufactured products and services.

Edge said the deal to acquire a controlling stake in Milrem Robotics is the largest foreign investment in Estonia’s growing defence industry.

The investment will help the Estonian company to expand its workforce, step up production and grow its footprint internationally, while providing Edge with access to markets in Northern Europe and beyond, the statement said.

“There is great potential here for both companies, and our investment in Milrem will allow it to take advantage of Edge's considerable resources to offer our customers operating in perpetually changing operating environments a more robust portfolio of superior autonomous systems at competitive costs,” Mansour AlMulla, managing director and chief executive of Edge Group, said.

“A presence in Estonia also provides Edge with strategic access to Northern Europe, increasing valuable opportunities for us across the continent and further afield, and strengthens our position as a serious global player in this sector.”

Edge will have majority control of Milrem Robotics after the transaction, with other shareholders including German combat systems company Krauss Maffei-Wegmann, Milrem's founder and chief executive Kuldar Vaarsi, Estonian private investors and company employees.

Mr Varsi said: “Milrem Robotics carried out an intensive investment round aimed at finding ways to support further expansion, and Edge Group, which comprises 20 different … technology and defence entities across multiple domains, offered the best opportunity for us to realise our ambitions of further international growth, in terms of footprint, and the development of our industry-leading solutions.”

The Estonian company will continue working with Krauss-Maffei Wegmann, “whose expertise has been instrumental to Milrem Robotics’ work since acquiring a stake in 2021", he added.

Milrem Robotics, which was established in 2013 and employs about 200 people, will continue to be based in the Estonian capital Tallinn, according to the statement. It also operates offices in Finland, Sweden, the Netherlands and the US.

Its main products are the THEMIS and Multiscope unmanned ground vehicles, the Type-X unmanned combat vehicle and the MIFIK land vehicle autonomy package. The first two are intended to support dismounted soldiers, and for commercial purposes such as forestry and firefighting, respectively. The Type-X is a wingman for mechanised defence units.

The company's products have been sold to 16 countries, including the US, Spain, the Netherlands, Norway, France, Germany and the UK.

“The addition of Edge as a new majority owner will allow Milrem to increase production, hire new people, acquire new know-how and also significantly expand its product portfolio, thereby become a stronger company internationally,” said Riho Terras, chairman of the supervisory board of Milrem Robotics.

“This in turn allows the company to significantly and more efficiently contribute to the development of Estonia’s defence capability.”