An innovative special purpose acquisition company (SPAC) merger is catching investors’ eyes today. Eve, a unit of Embraer (NYSE:ERJ), will be merging with Zanite Acquisition Corp. (NASDAQ:ZNTE) to become a public entity on the New York Stock Exchange under the ticker EVEX. So, what should investors know about the Embraer SPAC merger? Let’s dive in.
While the stock will trade as EVEX, the warrants for Eve will trade under EVEXW. Additionally, the transaction was unanimously approved by both boards of Embraer and Zanite and is expected to close during Q2 of 2022. In response to the news, shares of ERJ stock are trading 15% higher, while ZNTE stock is up less than 1%.
Eve is an electric vertical take-off and landing (eVTOL) company. Indeed, this innovation has the potential to change traditional aerial transportation. This is because eVTOL aircrafts don’t require a long, horizontal runway. In fact, eVTOL aircrafts operate much like a drone with omnidirectional fans.
Embraer CEO Francisco Gomes Neto commented on the industry and the SPAC merger today, saying:
“We believe that the urban air mobility market has enormous potential to expand in the coming years based on an efficient, zero-emissions transport proposition, and that with this business combination, Eve is very well positioned to become one of the major players in this segment.”
However, does Eve have the potential to be the next groundbreaking aerial transportation company? Let’s dive into the details involving the Embraer SPAC merger.
What to Know About the Embraer SPAC Merger
- Assuming no redemptions from Zanite’s shareholders, Eve will have about $512 million in cash after the transaction. The cash will be used to fund internal operations, such as its flying taxi, and support future growth.
- The transaction will value Eve’s equity at $2.9 billion. After the transaction closes, Embraer will own 82% of the equity stake in Eve, which includes its private investment in public equity (PIPE) investment.
- Additionally, private investors in Eve include BAE Systems, Rolls Royce, Azorra Aviation and SkyWest.
- Impressively, Eve already has an order backlog worth more than $5 billion. Preorder customers include ride-sharing companies and helicopter operators. For example, Azorra Aviation and Republic Airways have already preordered 200 eVTOL aircrafts each. Similarly, SkyWest has preordered 100 aircrafts.
- CEO Neto believes that Eve will reach revenue of $4.5 billion by 2030. Furthermore, he thinks it will control 15% of the global urban air mobility market.
- Additionally, Embraer has given Eve a royalty-free license to use Embraer’s intellectual property (IP) and employees as a source of knowledge.
- Earlier today, Embraer announced a joint study partnership with BAE Systems to utilize Eve’s eVTOL aircrafts as a defense and security asset. The partnership will “build[s] on Eve’s development for the urban air mobility market and will look at how the aircraft could provide cost-effective, sustainable and adaptable capability as a defence variant.”
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
