Electric aircraft startup Archer will go public through a merger with a blank-check company backed in a deal valued at approximately $3.8 billion and backed by an order and investment from United Airlines, which is among the first major airlines to commit to the purchase of air taxis.
The deal with Atlas Crest Investment Corp is expected to provide $1.1 billion to the company which makes electric aircraft with vertical take-off and landing.
Archer and Atlas Crest said that the proceeds include a $600 million private investment from United Airlines Holdings Inc, Stellantis, investment banker Ken Moelis and Mubadala Capital, the investment arm of Abu Dhabi's state investor Mubadala Investment Co.
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The deal is the latest in an increasingly crowded market dominated mostly by aerospace companies and tech start-ups trying to cash in on industry efforts to reduce carbon emissions.
Archer said that it has an order from United Airlines worth $1 billion and an option for an additional $500 million of aircraft.
United said separately that it is teaming up with regional carrier Mesa Airlines to buy 200 Archer eVTOL aircraft that will take people from cities to airports within the next five years.
"Given that the entire electric aircraft market is in its infancy, needless to say it will take time to refine the product and get the regulatory approvals," Raymond James analysts said.
Palo Alto-based Archer was launched in May of last year and is backed by former chief executive officer of Walmart eCommerce U.S. Marc Lore. The company said that it is developing an electric aircraft that can travel up to 60 miles at 150 miles per hour.
A blank-check company, or a special purpose acquisition company (SPAC), is a shell company that uses capital raised through an initial public offering (IPO) to buy a private firm, thereby taking it public. They have gained popularity as an alternative to public markets for companies seeking to avoid a traditional IPO.
Atlas Crest IPO And Moelis Information
Moelis-led Atlas Crest raised $500 million in its IPO in October. The veteran banker founded investment firm Moelis & Co in 2007, since when it has advised on more than $3.5 trillion worth of transactions. Moelis also served as the president of UBS Investment Bank.