EVTOL Company Eve Gets Spin Out From Embraer, SPAC Deal: What Investors Should Know

Another eVTOL (electric vertical take-off and landing) company is going public via SPAC merger with a deal announced Tuesday morning. Here are the details.

The SPAC Merger: Urban air mobility company Eve is going public in a SPAC merger with Zanite Acquisition Corp (NASDAQ:ZNTE). The deal values Eve at a pro forma enterprise value of $2.4 billion.

A $305 million PIPE includes investments from strategic partners Azorra Aviation, BAE Systems (OTC:BAESY), Republic Airways, Rolls-Royce and SkyWest Inc (NASDAQ:SKYW).

The majority stockholder in Eve is Embraer SA (NYSE:ERJ), which is also participating in the PIPE on the SPAC merger. After the merger, Embraer is expected to own around 82% of the company. Embraer will have a three-year lockup on its shares in Eve.

Public ZNTE shareholders will own 8% of the new company. Eve will trade with the ticker EVEX on the NYSE. The deal is expected to close in the second quarter of 2022.

About Eve: As Embraer’s urban air mobility unit, Eve will operate as a stand-alone company while still maintaining royalty-free licenses to Embraer’s intellectual property.

Eve is developing a four passenger vehicle that can travel 60 miles and provides six times lower cost per seat than traditional helicopters. A planned six-passenger autonomous vehicle is part of Eve’s future plans.

Eve expects to form joint operations with partners instead of owning the aircraft.

Related Link: December SPAC Merger Calendar: Upcoming Votes, Stocks To Watch

Growth Ahead: Proceeds from the transaction will help fund the design and production of Eve’s vehicles and continue on their plans to enter production in the future.

Eve has an order pipeline valued at around $5.2 billion. The pipeline includes non-binding letters of intent for 1,735 vehicles from 17 launch customers.

The urban air mobility market is worth an estimated $760 billion, according to Eve. Embraer's global presence and list of global partners is expected to help with Eve’s growth.

SkyWest has a launch order for 100 vehicles. Republic has a launch order for up to 200 vehicles. BAE Systems has signed a global defense collaboration agreement with Eve.

Financials: Eve is a pre-revenue company with no revenue planned until fiscal year 2024. The company sees revenue hitting $21 million in fiscal 2024 and $45 million in fiscal 2025. Operations begin scaling in fiscal 2026 with revenue estimates jumping to $305 million. The company forecasts revenue of $4.5 billion in fiscal 2030.

Eve sees deliveries of 75 vehicles in fiscal 2026, 340 vehicles in fiscal 2027 and hitting 1,117 deliveries in fiscal year 2030.

The company forecasts revenue in fiscal 2030 to be split 55% eVTOL vehicles, 18% fleet operations and 26% services/support.

Price Action: ZNTE shares are up slightly to $10.18 on Tuesday.

ERJ shares are up 16% to $16.06 on Tuesday.

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