Archer to be listed on NYSE through Atlas Crest Investment merger
Business combination agreement expected to provide approximately $1.1 billion of gross proceeds. United Airlines to purchase $1 billion worth of Archer’s eVTOL aircraft.
Rendering of Archer's upcoming eVTOL aircraft, to be unveiled in 2021. Photo Credit: Archer
It was announced on Feb. 10 that Archer (Palo Alto, Calif., U.S.) an urban air mobility (UAM) company and developer of all-electric vertical takeoff and landing (eVTOL) aircraft, and Atlas Crest Investment Corp., a special purpose acquisition company, have entered into a definitive agreement for a business combination that would result in Archer becoming a publicly listed company by Q2 2021. It is anticipated that the post-closing company, Archer, will be listed on the NYSE with ticker symbol “ACHR.”
The transaction values the combined company at an implied $3.8 billion pro forma equity value at the $10.00 per share PIPE price. The business combination agreement is expected to provide approximately $1.1 billion of gross proceeds to the combined company, assuming minimal redemption, to fund expected future growth, including a fully committed $600 million common stock PIPE with participation from leading strategic and financial investors. These include United Airlines, Stellantis and the venture arm of Exor, Baron Capital Group, the Federated Hermes Kaufmann Funds, Mubadala Capital, Putnam Investments and Access Industries. Ken Moelis and affiliates, along with Marc Lore, are also investing $30 million in the PIPE. Net cash from the transaction will be used to fund Archer’s development to commercialization and is expected to exceed the funding required to achieve cash flow positive. Archer’s existing shareholders will roll 100% of their shares into the combined company.
United Airlines has entered into an aircraft purchase agreement to invest in Archer as part of the airline’s broader effort to partner with leading technology companies that will decarbonize air travel.
Led by co-founders and co-CEOs Brett Adcock and Adam Goldstein, Archer’s mission is to advance the benefits of sustainable air mobility and become the leader in the new era of UAM, a $1 trillion-plus market, according to leading industry research. Archer reports that it is developing the world’s first commercially viable all-electric UAM platform. The composite-intensive eVTOL aircraft is expected to be capable of traveling distances of up to 60 miles at 150 miles per hour; the full-scale version will be unveiled in 2021.
“As we look towards the next era of sustainable travel and work, it’s important to invest in companies with a firm vision for change, without sacrificing efficiency or innovation,” says Ken Moelis, chairman of Atlas Crest and Chairman and CEO of Moelis & Company. “We’re dedicated to partnering with disruptive, world-class companies undergoing transformational growth. Archer’s dedication to swift, sustainable mobility is coming to life and it’s a journey we’re thrilled to be a part of.”
In addition to Archer’s business combination agreement, United Airlines has entered into an aircraft purchase agreement to invest in Archer as part of the airline’s broader effort to partner with leading technology companies that will decarbonize air travel. Under agreement terms, United has placed an order, subject to the company’s business and operating requirements, for $1 billion of Archer’s aircraft, with an option for an additional $500 million. United, in partnership with Mesa Airlines, expects to offer customers a quick, economic and low-emission way to get to airports within its major hubs by 2024.
“Part of how United will combat global warming is embracing emerging technologies that decarbonize air travel. By working with Archer, United is showing the aviation industry that now is the time to embrace cleaner, more efficient modes of transportation. With the right technology, we can curb the impact aircraft have on the planet, but we have to identify the next generation of companies who will make this a reality early and find ways to help them get off the ground,” says United CEO Scott Kirby. “Archer’s eVTOL design, manufacturing model and engineering expertise has the clear potential to change how people commute within major metropolitan cities all over the world.”
The business combination agreement with Atlas Crest Investment Corp. comes on the heels of several strategic partnerships for Archer. In January 2021, Archer also announced it had entered into a strategic collaboration agreement with Stellantis N.V. (Amsterdam, Netherlands), with a focus on accessing its low-cost supply chain, advanced composite material capabilities, and engineering and design experience. “Unlocking the potential of new technologies like urban air mobility is a key enabler in creating a broad mobility ecosystem for consumers,” adds Mike Manley, head of Americas, Stellantis. “We are proud to deepen our relationship with Archer Aviation through this investment and we look forward to growing our partnership to accelerate a pathway to innovative, sustainable transportation.”
Moelis & Company LLC is serving as exclusive placement agent on the PIPE. Barclays Capital Inc. is serving as exclusive financial and capital markets advisor to Archer. Moelis & Company LLC is serving as exclusive financial advisor to Atlas Crest. Cantor Fitzgerald & Co. is serving as exclusive capital markets advisor to Atlas Crest. Duff & Phelps, LLC has provided a fairness opinion in connection with the transaction to the Atlas Crest board of directors. Cooley LLP is serving as legal advisor to Archer. Kirkland & Ellis LLP is serving as legal advisor to Atlas Crest.