BT Brands Inc. BTBD shares skyrocketed Wednesday after the company announced an all-stock merger with privately held Aero Velocity Inc., a Cincinnati-based drone technology firm.

The combined company will focus on advanced unmanned aerial systems and artificial intelligence solutions for government and commercial clients.

Aero Velocity shareholders are expected to hold roughly 89% of the merged entity, with BT Brands investors retaining about 11%.

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The transaction, unanimously approved by both boards, is slated to close in late 2025 or early 2026, pending shareholder and regulatory approvals.

Upon completion, the company will adopt the Aero Velocity name and continue trading on the Nasdaq Capital Market. Mark Hastings, Aero Velocity’s chief executive, will lead the combined group.

“We are thrilled to have entered into this agreement with BT Brands,” Hastings said, adding that drones are still in the early stages of adoption across industries.

The merger includes an equity investment of $3 million to $5 million by Aero Velocity shareholders. Ownership stakes could shift depending on BT Brands’ financial position at closing.

Financial advisory roles are being handled by Maxim Group for BT Brands and Chardan Capital Markets for Aero Velocity.

Aero Velocity provides Drones-as-a-Service solutions, integrating sensors and AI for mapping, inspections, agriculture, forestry, defense, and emergency response. The firm also acquired assets from Workhorse Group Inc. WKHS in 2024 to expand its portfolio.

BT Brands, historically focused on restaurant operations, is repositioning itself to capitalize on the fast-growing drone sector.

Broader exposure to the industry can be accessed through the iShares U.S. Aerospace & Defense ETF ITA and the SPDR S&P Kensho Future Security ETF FITE.

Price Action: BTBD shares are trading higher by 78.33% to $3.299 at last check Wednesday.

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