Embraer’s Eve to go public via SPAC merger with $2.4B valuation

Avatar for Jen NevansBy Jen Nevans | December 21, 2021

Estimated reading time 5 minutes, 36 seconds.

Eve Urban Air Mobility has become the next major urban air mobility (UAM) company to announce plans to go public through a merger with Zanite Acquisition Corp. (Nasdaq: ZNTE), a special purpose acquisition company (SPAC).

Eve Embraer Zanite SPAC
Embraer’s Eve plans to go public through a merger with Zanite Acquisition Corp., a special purpose acquisition company (SPAC). The deal is expected to close in the second quarter of 2022. Embraer Image

The deal, which gives Eve a pre-money valuation of around US$2.4 billion, has been in the works at least since early June, when Zanite confirmed it was in negotiations with Eve. Pending shareholder approval, the companies expect the deal to close in the second quarter of 2022.

Eve said the deal, after transaction expenses, will unlock about $512 million in net cash, funded through a combination of Zanite’s $237 million cash held in trust and $305 million in total private investment in public equity (PIPE) associated with the merger.

Eve parent company Embraer is contributing $175 million to the PIPE, with Zanite’s sponsor kicking in $25 million and the remaining $105 million coming from a consortium of financial and strategic investors including Azorra Aviation, BAE Systems, Banco Bradesco, Falko Regional Aircraft, Republic Airways, Rolls-Royce, and SkyWest.

Eve separately announced conditional orders for its eVTOL aircraft from Azorra, Republic Airways, and Skywest, and a deal with BAE to explore potential defense variants of the model.

But if Eve’s business combination with Zanite is anything like previous eVTOL SPAC deals, the company could see much lower gross proceeds should Zanite’s shareholders choose to redeem their shares rather than remain invested in the combined company.

SEC filings suggest that around 95% of shareholders in Broadstone Acquisition Corp. chose to redeem their shares when the SPAC combined with U.K.-based eVTOL developer Vertical Aerospace last week. Other eVTOL developers, including Joby Aviation, Lilium, and Archer Aviation, also experienced shortfalls in the cash they received from their own SPAC deals compared with initial projections. These mass redemptions led to Volocopter reportedly cancelling its own SPAC deal last month.

Nevertheless, in a press release issued today, Francisco Gomes Neto, president and CEO of Embraer, said he believes that with this business combination, “Eve is very well positioned to become one of the major players in this segment.”

Eve said the proceeds from the transaction will be used to develop and commercialize its UAM ecosystem, which includes designing and producing eVTOL aircraft, as well as providing service and support, fleet operations, and urban air traffic management solutions.

The company has secured a total of 1,735 conditional pre-orders of its eVTOL aircraft from 17 launch customers, worth about $5.2 billion, and plans to launch its UAM network in various regions by 2026.

“Eve was founded on a vision to accelerate the UAM ecosystem, make safe and affordable urban air transportation available to all citizens, while reducing global carbon emissions,” said Andre Stein, co-CEO of Eve. “The transaction with Zanite is a major milestone that will accelerate our strategic plan and support us in realizing our vision.”

If the merger is successful, Zanite will change its name to Eve Holding and will be listed on the New York Stock Exchange under the ticker symbol EVEX. Embraer will become a majority shareholder, owning about 82% of the combined company.

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