Embraer’s Air Mobility unit agrees to $2.4 billion SPAC deal

Embraer SA’s Eve Urban Air Mobility unit will merge with Zanite Acquisition Corp. next year, the latest in a string of deals as flying-taxi startups seek capital from public markets.

The transaction announced Tuesday includes $237 million in cash from Zanite, a special purpose acquisition company, and a $305 million PIPE, or private investment in public equity. The PIPE has multiple investors, including $175 million from Embraer and $105 million from a consortium that includes BAE Systems, Rolls-Royce Holdings Plc and two U.S. regional airlines, Republic Airways and SkyWest Inc. 

Embraer will retain an 80% equity stake in the company following the merger. Bloomberg News first reported on the talks between Eve and Zanite in June.

The combination, expected to close in the second quarter of 2022, values Eve at $2.4 billion. Embraer has agreed to a three-year lockup on its rollover shares and Zanite’s sponsor has agreed to a three-year lockup on its founder shares.

Embraer American Depository Receipts traded in New York surged 15% to $15.97 as of 10:08 a.m., the biggest jump in more than six months. Zanite rose 0.3% to $10.18. 

Zanite is led by co-Chief Executive Officers Kenn Ricci, co-owner of Directional Aviation Capital, which controls private-jet flight provider Flexjet, and Steve Rosen, co-founder of private equity firm Resilience Capital Partners. The Cleveland-based SPAC raised $230 million in an initial public offering last year. 

Eve said it has amassed more than 1,700 orders for its electric vehicle from 17 launch customers, a backlog it values at $5 billion.

The company, which is based in Melbourne, Florida, will be led by co-CEOs Jerry DeMuro, a former CEO at defense contractor BAE Systems Inc., and Andre Stein, who has been Eve’s top executive since its founding. Eve expects to trade on the New York Stock Exchange under the ticker EVEX.

Other eVTOL companies including Joby Aviation, Lilium and Archer Aviation have gone public through SPAC mergers in 2021. Archer shares have declined 35% this year through Monday, while Joby and Lilium are both down 41%.