eVTOLs next industry seeing wave of SPAC deals after Vertical, Eve announcements
In SPAC news this week, two electric Vertical Take-Off and Landing, or eVTOL, aircraft companies made news related to special purpose acquistion companies.
ZANITE IN TALKS TO TIE UP WITH EMBRAER UNIT: On Thursday, Embraer (ERJ) confirmed that Eve Urban Air Mobility Solutions has started negotiations related to a possible business combination with Zanite Acquisition Corp. (ZNTE). "The negotiations with Zanite are ongoing. The company cannot predict if Eve will reach a definitive agreement or what will be the terms thereof. The company will keep the market informed of subsequent material developments in the context of such negotiations, to the extent imposed by applicable laws and stock exchange regulations," Embraer stated. Zanite Acquisition separately confirmed that it is in negotiations relating to a potential business combination with Eve Urban Air Mobility Solutions.
Following the news, Bank of America analyst Ronald Epstein upgraded Embraer to Buy from Neutral with a price target of $20, up from $8. Electric vertical takeoff and landing, or eVTOL, aircraft are currently one of the "hottest" urban mobility innovations and the addressable market could be about $1T worldwide by 2040, contends Epstein. Given Embraer's know-how on developing aircraft on budget and on schedule, existing relationship with regional airlines, and worldwide ops for production and maintenance, he sees Embraer's Eve unit as being in a strong position in this nascent market, Epstein said. The analyst added that he sees "significant upside" from Eve's potential public listing or alternative investment opportunities.
VERTICAL AEROSPACE TO COME PUBLIC VIA SPAC: On Friday, Vertical Aerospace Group, a UK-headquartered engineering and aeronautical business developing electric Vertical Take-Off and Landing, or eVTOL, aircraft, announced it has entered into a definitive agreement for a business combination with Broadstone Acquisition Corp. (BSN), a special purpose acquisition company. The transaction will result in Vertical becoming a publicly-traded company, with a pro forma equity value of approximately $2.2B. Vertical will be listed on the New York Stock Exchange following the combination, which is expected to close in the second half of 2021, under the ticker "EVTL." Vertical is also announcing investments from American Airlines (AAL), Avolon, Honeywell (HON) and Rolls-Royce (RYCEY), who have invested in the PIPE and are part of Vertical's strategic partner ecosystem; Microsoft's (MSFT) M12, 40 North and Rocket Internet SE have also invested in the business. "Commercial partnerships and individual conditional pre-orders have also been agreed with American Airlines, Virgin Atlantic and Avolon for up to 1,000 aircraft in total, providing a direct route to market and opportunity to work together on key go-to-market workstreams. [...] In the United States of America, American Airlines expects to work with Vertical on passenger operations and infrastructure development. In the United Kingdom, Virgin Atlantic and Vertical expect to work together to explore the joint venture launch of a Virgin Atlantic branded short haul eVTOL network, including operations and infrastructure development," the companies said.
Broadstone Acquisition also released an investor presentation that includes details on the long-term business plan and projections. Vertical sees annual aircraft production of 50 aircraft by 2024, with revenue of $192M, growing to 2,000 annual aircraft produced and $7.27B of revenue by 2028, the slides indicate.
NEXTNAV, SPARTACUS MERGER: NextNav and Spartacus Acquisition (TMTS), a special purpose acquisition company, announced their entry into a definitive merger agreement that will result in NextNav becoming a public company. Upon closing of the business combination, the combined company will be named NextNav and its common stock and warrants will be listed on the Nasdaq under the ticker symbol (NN) and (NNW), respectively. Gross proceeds of up to $408M from the business combination are expected to be used to fuel growth in its current businesses, continue to build NextNav's next generation GPS platform, expand products one of which is already deployed in 4,400 cities, and to expand its land-based radio positioning and timing network. NextNav owns a portfolio of nationwide spectrum licenses for 2.4B MHz-PoPs of 900 MHz spectrum. The transaction reflects a pro forma enterprise valuation for NextNav of approximately $900M and a pro forma market capitalization of approximately $1.2B, assuming no SPAC redemptions. All current NextNav equity holders will roll the entirety of their existing equity holdings into the combined company. The transaction is expected to provide up to approximately $408M in gross proceeds, comprised of Spartacus' approximately $203 million of cash held in trust and the $205 million fully committed common stock PIPE financing. The boards of both NextNav and Spartacus have unanimously approved the proposed transaction, which is expected to be completed late in the third quarter or early in the fourth quarter, subject to closing conditions.
VALO HEALTH, KHOSLA VENTURES COMBINATION: Valo Health and Khosla Ventures Acquisition (KVSA) announced that they have entered into a definitive merger agreement. The transaction values the combined company at a pro forma market value of approximately $2.8B. The combined company is anticipated to have a pro forma cash balance of approximately $750M before deducting anticipated transaction expenses, including existing Valo cash of approximately $250M as of the date hereof, approximately $333M of net cash held in KVAC's trust, after deducting deferred underwriting commissions and assuming no redemptions, and a $168.5M private investment in public equity priced at $10.00 per share.
DAVE, VPC IMPACT ACQUISITION HOLDINGS III MERGER: Dave and VPC Impact Acquisition Holdings III (VPCC), a special purpose acquisition company sponsored by Victory Park Capital, announced that they have entered into a definitive agreement for a business combination that will result in Dave becoming a publicly traded company listed under the ticker symbol "DAVE," with an expected pro forma, fully-diluted equity value of approximately $4B, assuming no redemptions. VPC has been a longstanding investor in Dave, most recently providing a $100M credit facility to the company in January 2021. VPCC completed its initial public offering in March 2021. Upon completion of the transaction, the combined company is expected to have a fully-diluted equity value on a pro forma basis of approximately $4 billion, assuming no redemptions. It is expected to result in over $375 million of cash on the combined company's balance sheet, reflecting a contribution of up to $254M of cash held in VPCC's trust account and a $210M concurrent private placement led by Tiger Global Management with additional participation from Wellington Management and Corbin Capital Partners. The deal is expected to close late in the third quarter or in the fourth quarter of 2021.
SPAC REGISTRATION STATEMENT: Nabors Industries (NBR) has announced that Nabors Energy Transition Corp., a newly formed special purpose acquisition company and an affiliate of Nabors, has filed a Registration Statement on Form S-1 with the SEC in connection with a proposed initial public offering of its units. NETC intends to list its units on the New York Stock Exchange under the symbol "NETC.U." Each unit will consist of one share of NETC's Class A common stock and one-third of one redeemable warrant to purchase one share of NETC's Class A common stock. NETC intends to raise $250M in the proposed offering through the sale of units consisting of common stock and warrants to purchase common stock.
SOLID POWER IN TALKS WITH SPAC: Solid Power, a solid-state battery maker whose investors include Ford (F) and BMW (BMWYY), is in discussions to go public via a merger with Decarbonization Plus Acquisition Corp. III (DCRC), a special purpose acquisition company, Bloomberg's Gillian Tan reported, citing people with knowledge of the matter. The blank-check company is aiming to raise over $100M in new equity to support a deal that's set to value the combined entity at approximately $1.2B, including debt, the author said, noting that terms could change and it's possible discussions could fall apart.
VISTA GLOBAL COULD GO PUBLIC VIA SPAC: Vista Global, a private aviation provider that competes with Warren Buffett's NetJets, is in talks to go public through a merger with a special purpose acquisition company, Bloomberg's Gillian Tan and Aaron Kirchfeld report, citing people familiar with the matter. A transaction could value Vista at more than $10B including debt, the people said.
THRASIO IN SPAC TALKS TOO: Thrasio, which acquires private-label businesses on Amazon (AMZN), is in talks to come public via a deal with the Churchill Capital Corp V (CCV) SPAC sponsored by Michael Klein, Bloomberg's Crystal Tse, Liana Baker and Gillian Tan report, citing people with knowledge of the talks. The online retailer, which is backed by Advent International, could be valued at over $2B in a tie-up with the SPAC, and the valuation could even climb as high as $10B, the authors note.
SPORTRADAR PULLS OUT OF SPAC DEAL: Sportradar is walking away from a potential deal with Horizon Acquisition Corp. II (HZON) to take the sports data provider public and will instead try to go public through a more traditional IPO, Sportico's Eben Novy-Williams reported, citing people familiar with the matter.
Barrington analyst Michael Petusky initiated coverage of Fortress Value Acquisition Corp. II (FAII) with an Outperform rating and $14 price target. The special purpose acquisition company has a deal to bring ATI Physical Therapy, a provider of outpatient physical therapy services, public. Shortly after approval of their deal, ATI will begin trading as an independent entity under the symbol ATIP at which point he will transition investment coverage to ATI Physical Therapy (ATIP), Petusky noted. He thinks ATI has a chance to grow "well above" the projected core organic growth for the outpatient physical therapy space due to its "aggressive" facility opening plans, its ability to successfully develop its sales channels and its strategic M&A opportunity, Petusky told investors.
DA Davidson analyst Thomas Diffely initiated coverage of Airspan Networks with a Buy rating and $20 price target. The analyst started coverage of Airspan through its SPAC sponsor New Beginnings Acquisition Corporation (NBA), saying the merger between NBA and Airspan is "attractive" given that Airspan is a company with solid revenue, quality products and services, and continued market growth potential. Further, he believes "the investment size is about right" at about $80M in net cash on the balance sheet.
Colliers analyst Gene Mannheimer initiated coverage of GigCapital2 (GIX) with a Buy rating and $14 price target. GigCapital2 previously announced a business combination agreement with UpHealth Holdings, which Mannheimer said is promoting greater access and better outcomes by combining telemedicine, in-person care, digital pharmacy and behavioral health into "one interwoven ecosystem." He sees UpHealth boasting "a superior position with its model" than other companies that deliver point solutions and/or limited functionality. Upon the closing of the transaction, the combined company will be named UpHealth and will continue to be listed on the NYSE under the new ticker symbol "UPH."
Loop Capital analyst Daniel Adam initiated coverage of Forest Road Acquisition (FRX) with a Hold rating and $11 price target. The SPAC's Beach Body business sits at the confluence of three significant secular trends that include digital subscriptions, connected fitness, and health and wellness products, the analyst tells investors in a research note. Adam added that tailwinds arising out of the pandemic for Beachbody's core category offerings should be "long lasting."
Benchmark analyst Josh Sullivan initiated coverage of NavSight Holdings (NSH) with a Buy rating and $22 price target. The special purpose acquisition company is in the process of merging with Spire Global, whose platform collects terrestrial RF signal data from the largest multi-purpose nanosatellite constellation. He sees space emerging as a differentiated data set in the AI/ML analytics "megatrend" and sees Spire having competitive advantages that include an at scale established infrastructure, a software driven backbone, and vertical integration, Sullivan tells investors.
Benchmark's Michael Ward initiated coverage of NextGen Acquisition Corp. (NGAC) with a Buy rating and $22 price target. The special purpose acquisition company is in the process of buying Xos, which he views as "one of the best positioned companies to benefit from the expansion of ecommerce activity and the electrification of the commercial delivery fleet," Ward tells investors. Xos has orders with some of the largest commercial fleets in the U.S., noted Ward, who projects the percentage of zero-emission vehicles sold into the Class 5 to the regional portion of the Class 8 truck market to near 30% by 2025.
SPAC IPOS THIS WEEK:
Logistics Innovation Technologies(LITT) opened on June 11 at $9.95. The company intends to partner with a company "focused on innovation in the logistics industry, which could be a logistics technology company or a traditional industry player that can leverage technology to improve the efficiency of customer supply chains and their markets."
Iron Spark I (ISAA) opened on June 9 at $9.90. The company intends to pursue prospective targets that are consumer brands with an enterprise value between $750M and $3B.
Global Consumer Acquisition (GACQ) opened on June 9 at $9.90. The company intends to focus on industries that complement the management team's background, and to capitalize on the ability of the management team to identify and acquire a business, focusing on the consumer products and services sectors, where the management team has extensive experience.