We’re thrilled to announce Accel’s $145 million investment in CHAOS Industries, a company developing next-generation defense technologies that will shape national security and critical industries in the 21st century.

Over the past two decades, the same technological advancements reshaping our economy have begun to fundamentally change the nature of geopolitical conflict. Today’s battlefield is increasingly augmented, and tech is powering even more sophisticated threats for the U.S. and its allies.

This means that our future success in security, defense, and military operations will be more closely linked to technological sophistication than ever before—and it’s imperative that our capabilities rise to meet the moment. The traditional defense industry urgently needs to adapt to this new paradigm, but it has been slow to adopt truly transformative innovation. It will take a new generation of defense technology companies to help the industry get to where it needs to be.

Enter CHAOS Industries, founded in 2022 by John Tenet, Dr. Bo Marr, Gavin Hood, and Brett Cummings. The company builds groundbreaking new technologies that solve real-world problems by combining an engineering-led approach to product development with deep partnerships with the defense industry.

We’ve been impressed by the first product category CHAOS Industries brought to market, Coherent Distributed Networks, a paradigm-shifting technology category that enables unprecedented performance for sensors and effectors. Success in this wave of defense tech will come from teams like CHAOS Industries that pair expertise in artificial intelligence, and quantum computing with a deep understanding of defense programs and the unique go-to-market needs of this category.

The defense industry is still in the early stages of digitization, which makes it an exciting time to work with CHAOS Industries, which is developing innovations with real potential for scale. We’re delighted to partner with John, Bo, Gavin, Brett, and the entire CHAOS Industries team to bring those new AI, robotics, and machine learning technologies to the defense industry.

BELOIT, Wis., September 19, 2024 / Fairbanks Morse Defense (FMD), a portfolio company of Arcline Investment Management, has entered into an agreement with Rolls-Royce to acquire its Naval Propulsors and Handling business. The acquisition will include a range of propellers and waterjets for naval applications, as well as marine handling systems, which enable the deployment and recovery of manned and unmanned craft, and other cargo, from naval vessels.

“When you look at the 150-year history of Fairbanks Morse Defense, you will find a handful of distinctive moments that completely transformed this company. We believe the acquisition of Rolls-Royce naval propulsors and handling businesses will become one of those moments,” said George Whittier, CEO of Fairbanks Morse Defense. “The way that our products and services complement each other is unmatched in the defense industrial base. Combining our capabilities allows Fairbanks Morse Defense to substantially increase what we offer to our U.S. maritime defense customers while also offering our systems and components solutions to Rolls-Royce’s global customer base.”

The acquisition will add the following to the Fairbanks Morse Defense portfolio:

Rolls-Royce Pascagoula, Mississippi Facility – Pascagoula is a fully integrated marine propeller and waterjet manufacturing campus that is responsible for producing controllable pitch propeller blades and hub body castings, large fixed-pitch propellers, and waterjets for the U.S. Navy. It is the country’s only privately owned foundry that is qualified to cast propellers for the U.S. Navy’s surface and submarine fleet, making it a United States National Asset.

Rolls-Royce Walpole, Massachusetts Facility – For over 50 years, the Rolls-Royce Walpole campus has delivered critical ship propulsor systems and aftermarket services for the U.S. Navy and Coast Guard and other international navies, including controllable pitch propellers, fixed propellers, and waterjets.

Rolls-Royce Peterborough, Ontario Canada Facility – The Centre of Excellence for Naval Handling in Peterborough, Ontario supports the design and manufacture of handling systems, launch and recovery systems, and undersea sensors and systems for navies across the globe. Its products include the next-generation Mission Bay Handling System for the Global Combat Ship program, a frigate program for the UK Royal Navy, Royal Canadian Navy, and Royal Australian Navy.

Rolls-Royce Naval-Marine propellers can be found on all the U.S. aircraft carriers currently in service. They are also used on U.S. Navy fleet supports, amphibious ships, surface combatants, submarines and more, as well as on U.S. Coast Guard vessels. Rolls-Royce handling systems are found on many of the U.S. Navy’s surface combatants.

“Rolls-Royce Naval Propulsors & Handling is an industry leader and trusted supplier to navies around the world. We are pleased to collaborate with Fairbanks Morse Defense, who recognizes the value of this business and the outstanding opportunities for its strong future.” said Adam Riddle, President – Defense and Chairman & CEO, Rolls-Royce North America. “We believe this transaction represents the best outcome for the business, its people, and the military customers they serve.”

Fairbanks Morse Defense has built a diverse portfolio that now includes engines, electrical hardware, motors, valves, cranes, davit systems, fans, fittings, and water treatment solutions. The company has also advanced its technology offerings with AI, digital defense, telerobotics, additive manufacturing, smart engineering, uncrewed mission management, extended reality, and remote collaboration tools.

Jefferies is serving as financial advisor to Fairbanks Morse Defense.

This sale is subject to customary closing conditions, including regulatory review and approval. The financial details of the sale are not being disclosed.