Why the Electro Optic Systems (ASX:EOS) share price is pushing higher

The defence tech company is on the move after announcing a partnership deal with a German manufacturer.

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The Electro Optic Systems Holdings Ltd (ASX: EOS) share price is climbing today. The gains come after the company announced a partnership agreement with Diehl Defence.

In early afternoon trading, the communications, defence, and space company’s shares are fetching $4.06, up 3.31%.

Electro Optic Systems teams up with Diehl Defence

Investors are watching Electro Optic Systems shares following the release of the company’s latest update.

In its announcement, EOS advised it has signed a cooperation agreement with Diehl Defence.

Founded in 2004, Diehl Defence is a German arms manufacturer that primarily produces guided missiles and ammunition for armed forces.

The collaboration between the companies will see an initial focus “on the area of advanced stabilized and remotely operated weapon systems (RWS) for the European and NATO markets.”

According to Electro Optic Systems, its RWS technology is considered among the best in the world due to its accuracy, reliability and lightweight frame. The battle-proven system allows operators to access long-range and wide-area imagery of the battlespace. In addition, the RWS can also relay information to drones to lock onto targets for direct fire.

Under the cooperation agreement, an RWS production line will be established at Diehl’s facilities in Germany. From there, the technology will be transferred and integrated with Diehl products to cater for European defence forces’ requirements.

As well, both companies will work together on space and high-power electro-magnetics technologies. Electro Optic Systems hopes the partnership can lead to lucrative revenue opportunities with European and NATO defence forces.

Management commentary

Electro Optic Systems CEO Dr Ben Greene welcomed the partnership, saying:

This Cooperation Agreement with Diehl aligns companies that not only have complimentary and non-competing cutting-edge technologies, but organisational cultures and values that are strongly aligned. EOS is excited by the prospect of being able to offer and support our land and space technologies in conjunction with great German engineering know-how for the European and NATO markets.

Diehl Foundation board member and CEO of Diehl Defence Helmut Rauch added:

At Diehl we have a tradition of more than a hundred years of moving into new, demanding fields of technology on a proven foundation. Strategic partnerships are very important to our owner-managed company. The great technologies of EOS and the extraordinarily well-fitting corporate culture of EOS offer us excellent opportunities to develop a strategic business area.

About the Electro Optic Systems share price

It has been a difficult year for Electro Optic Systems shareholders, with the company’s share price tumbling by around 30%. EOS shares reached a 52-week high of $7.30 last year before positive investor sentiment wore off.

Electro Optic Systems has a market capitalisation of roughly $618 million, ranking 375th on the ASX.

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Aaron Teboneras owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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