The report that jumped a company worth 3 million d to over 100 million, and the connection to the Iron Dome

Just a year ago, a merger of a fintech and blockchain company from New Jersey called Nukkleus was completed into a SPAC company that was traded on Nasdaq, at a value of 105 million dollars. In the year that Nukkleus stock has been traded since then, it has lost most of its value and last week it reached a low with Value in the single millions of dollars (less than $3 million).

But then a sharp change of direction happened, to say the least. Within three trading days, the stock jumped more than 3,600%, from a price of $1.4 per share to $52.1, that is, from a value of less than $3 million to almost $130 million. Last Friday though the stock retreated by 23% and the company is currently trading at a value of less than 85 million dollars. And it is still a significant value addition within a few days. What caused the meteoric rise in the stock? Two words: Iron Dome.

It turns out that the blockchain company decided to become a defense technology company, and announced the purchase of an Israeli company that is one of the suppliers of the components for building the anti-missile defense system. According to Nuclaus’ announcement, it acquires control of Star 26 Capital, which owns 95% of the company Pomegranate which, according to the purchase announcement, is “an Israeli supplier of critical components for the Iron Dome missile defense system and a developer of tactical vehicles for defense and intelligence agencies.” In fact, it is about supplying generators for the air defense system.

Rimon, established in 1988, is engaged in the development, production and marketing of generators and hybrid systems, prototyping vehicles and trailers, as well as advanced lighting solutions. In a notification to the SEC (US Securities and Exchange Commission), it is stated that the company supplies generators used by Iron Dome launchers. It is also stated there that Ramon operates in two main lines of business: sells generators and related solutions through exclusive distribution agreements it has with third parties (such as the one with Iron Dome), and secondly, it deals with the engineering, planning, production, implementation and maintenance of special trailers that are used, for example, for firefighting and broadcasting satellite, and are sold in particular to security forces and intelligence agencies, with the IDF being specifically mentioned as a customer in the field.

The CEO will receive millions

The deal to buy Pomegranate is actually an “in-house” deal, because the person who has been running Nucleus since last September is Menachem (Mani) Shalom, 49, who is also the CEO of Star 26 and therefore owns the Pomegranate chain. The company’s website states that Shalom has 20 years of experience Entrepreneurship and technology According to the company’s data, he founded several companies over the years, including a start-up of a digital wallet and a software provider for the retail sector In the past he also served as the Chief of Staff of former Prime Minister Ehud Barak, although it is not specified when exactly he held the position. Shalom himself is expected to receive a return worth several million dollars (in shares and cash).

Nucleus will pay $15 million for 51% of Star, in a combination of cash and equity payment, and it will be able to purchase the remaining shares for $16.1 million in the future. According to Nucleus, the purchase comes at a time when the company believes that growth is expected in the global defense sector, and it will integrate Star’s activities into its business structure and continue to look for growth opportunities. However, the transaction is subject to obtaining a third-party opinion, the approval of Nucleus shareholders and regulatory approvals.

In the company’s announcement, CEO Shalom wrote: “This merger positions Nucleus at the forefront of the growing defense industry. The purchase of Star 26 and Ramon is consistent with our strategic change to capitalize on the opportunities in the defense sector.” According to him, “Ramon’s expertise in defense products, along with its established relationships with defense exporters such as Rafael and Elbit Systems, strengthen Nucleus’ capabilities in providing innovative defense solutions.” This, from conversations we had in the market, various sources said that this is a supplier of commercial vehicles and generators, And not strategic solutions or advanced technologies.

Where will the money come from?

How can a company worth several million dollars acquire a company worth more than $30 million according to me? In order to finance the transaction, Nucleus announced a private offering in the amount of $10 million, in which an investor purchased units from it, each of which includes a share and an option to purchase an additional share, for a total of $6 per unit. The share price at the end of the week was approximately $40, so the investor in the issue The individual registers a profit “on paper”.