By John Jannarone and Jarrett Banks
Electric aircraft startup Archer Aviation Inc. is going public by merging with a special purpose acquisition company, or SPAC, called Atlas Crest Investment Corp. (NYSE: ACIC), the startup said in a statement. The $3.8 billion deal is expected to close in the second quarter of 2021, and will provide about $1.1 billion in gross proceeds to the combined company, it saidd.
The merger was first reported by IPO Edge. Shares of Atlas Crest Investment rocketed 37% in premarket trading.
The deal includes $600 million common stock PIPE with participation from leading investors including United Airlines, Stellantis and the venture arm of Exor, Baron Capital Group, the Federated Hermes Kaufmann Funds, Mubadala Capital, Putnam Investments and Access Industries, the statement said. Additionally Ken Moelis and affiliates, along with Marc Lore, are investing $30 million in the PIPE.
California-based Archer is chasing an electric air-mobility market that Morgan Stanley says could be valued at $1.5 trillion by 2040. Archer is developing electric vertical-takeoff-and-landing aircraft to serve as an environmentally sustainable air taxi. The top range of the aircraft is 60 miles at a speed of 150 mph, according to Archer’s website.
Driven by a combination of growing consumer acceptance and a favorable regulatory environment, the first commercial Urban Air Mobility passenger routes will be operational by 2025 and the passenger UAM market is estimated to grow to $90 billion in revenues by 2050, according to research firm Intro-act.
Air mobility is set to enter its fourth phase of funding as it starts receiving capital from public equity investors – as demonstrated by announced/rumored SPAC deals, as well growing interest from big ticket investors like ARK Invest.
While Archer is in a category of its own as an electric aviation company, investors have shown strong demand for several companies in the electric vehicle (EV) segment. Those include giants like Tesla Inc. along with younger companies like Canoo Inc. and Blink Charging Co.
The company said in January it entered an agreement with Fiat Chrysler Automobiles to benefit from access to FCA’s low-cost supply chain, advanced composite material capabilities, and engineering and design experience.
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