Zero carbon aircraft maker in SPAC deal
Vertical Aerospace is a leading UK-based engineering and aeronautical business founded in 2016 by energy tech entrepreneur Stephen Fitzpatrick to develop eVTOL aircraft. Its mission, says the company, is to make air travel personal, on-demand and carbon-free through designing, manufacturing, selling and servicing one of the world’s best eVTOL aircraft, the VA-X4, which will travel at speeds over 200 mph, be near silent when in flight, produce zero emissions, and be at low cost per passenger mile.
The VA-X4 is expected to be certified to the same standards as large commercial airliners and therefore, says the company, is expected to be 100x safer than a helicopter. Vertical intends to certify the VA-X4 to European Union Aviation Safety Agency (EASA) standards – the most stringent global standards – in order to unlock a large urban air mobility (UAM) total addressable market (TAM) of $1 trillion by 2040, with an upside TAM of $4.4 trillion by 2040.
The company says 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 addition to the merger announcement, the company also announced investments from American Airlines, Avolon, Honeywell and Rolls-Royce, who have invested in the private investment in public equity (PIPE) and are part of Vertical’s strategic partner ecosystem; Microsoft’s M12, 40 North and Rocket Internet SE have also invested in the business.
Stephen Fitzpatrick, Vertical CEO and Founder, says, “This is the most exciting time in aviation for almost a century; electrification will transform flying in the 21st century in the same way the jet engine did 70 years ago. [This] announcement brings together some of the largest and most respected technology and aeronautical businesses in the world and together we can achieve our aim of making the VA-X4 the first zero carbon aircraft that most people will fly on.”
Hugh Osmond, Chairman of Broadstone, says, “Transportation is one of the next big sectors of the global economy to be disrupted at scale. Vertical has a clear commercial plan to challenge short-haul air travel, and to create new markets where neither cars nor public transport can cope with demand. Stephen has built an outstanding management and engineering team with extensive experience in navigating the aviation regulatory approval processes. The team also has an outstanding track record of delivering projects commercially. In our assessment, Vertical has a considerable lead over competitors in this field – and has a clear business model to achieve commercialization and significant growth.”
The business combination with Broadstone values the combined company at a pro forma enterprise value of approximately $1.8 billion and pro forma equity value of $2.2 billion at the $10.00 per share PIPE price. The boards of directors of both Broadstone and Vertical have approved the proposed transaction, which is expected to be completed in the second half of 2021, subject to the usual approvals. The transaction is expected to result in gross proceeds of $394 million.
Following the combination, which is expected to close in the second half of 2021, Vertical will be listed on the New York Stock Exchange under the ticker EVTL.
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