Blackstone (BX) is investing $1 billion to form a military technology firm, Falcata, to counter inexpensive drones and other weapons, Bloomberg reported Thursday, citing a statement and interview with an executive.

The firm is combining two of its portfolio companies, Applied Systems Engineering and Technology Service, to create the new enterprise, investing more than $1 billion in debt and equity, the report said.

The company plans to acquire and fold more companies into Falcata, the report said, citing David Kaden, who leads the firm's military investments.

Blackstone did not immediately reply to MT Newswires' request for comment.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)