By Tatiana Bautzer
SAO PAULO (Reuters) – Embraer has agreed to merge its electric-aircraft subsidiary Eve with US-based SPAC Zanite, with an eye on a possible listing on the New York Stock Exchange (NYSE) in 2022, the companies said on Tuesday -market.
The transaction values Eve at $2.9 billion and will include in a first step the merger with blank check company (SPAC) Zanite Acquisition Corp. Thereafter, Eve will receive additional investment from a group that includes Embraer, Zanite, financial investors and strategic partners such as Azorra Aviation, BAE Systems, Republic Airways, Rolls-Royce and SkyWest Inc.
Embraer shares listed in the US soared in the pre-market by around 14% and in Brazil the shares opened up more than 16%.
Along with the Zanite deal, Embraer has announced up to 500 orders for Eve’s electric vertical take-off (eVTOL) aircraft. Orders were placed by Azorra (up to 200 units), Republic Airways (up to 200 units) and SkyWest (100 units).
In addition, the Brazilian company announced an agreement with the British BAE Systems to develop Eve’s aircraft for applications in the “defence and security” markets.
Following the investments by Embraer and Zanite, Eve, which will be listed on the NYSE under the code EveX, will have a cash position of $512 million, which will be used to develop its electric air taxi.
The company has already received orders worth approximately $5 billion, corresponding to approximately 1,735 aircraft from 17 customers including leasing companies, helicopter operators and transport sharing companies.
Embraer will retain an approximately 80% interest in Eve after the additional investment. Eve’s cash should be enough to cover the development costs of the electric aircraft until its certification, expected in 2025, Embraer Chief Executive Francisco Gomes Neto told Reuters.
Gomes Neto hopes that Eve will have several production sites because it will have to deliver to customers on several continents, but the factory locations have not yet been chosen. The chief executive projects Eve’s $4.5 billion in revenue in 2030, and a 15% share of the global urban air mobility market.
The production phase will likely be financed by debt issuance, said Eve co-chief Jerry DeMuro, former chairman of BAE Systems. Eve’s other co-CEO is Andre Stein, an Embraer executive for more than two decades.
Embraer will provide infrastructure for Eve, including the allocation of engineers as needed on projects, test sites and flight simulators. “This will allow us to reduce production costs,” said DeMuro in an interview.
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