SPACs Give Life to Air Taxis
Posted on 02/24/2021
What could go wrong with zero-revenue air taxi companies? Founded in 2009, Joby Aviation is a California headquartered transportation company developing an all-electric vertical takeoff and landing aircraft which it intends to operate as a fast, quiet, and affordable air taxi service beginning in 2024. Joby Aviation intends to operate as a commercial passenger aircraft beginning in 2024. Joby Aviation has entered into a definitive business combination agreement with Reinvent Technology Partners (NYSE:RTP), a special purpose acquisition company that takes a “venture capital at scale” approach to partnering with bold leaders and companies. Upon the closing of the transaction, the combined company will be named Joby Aviation, and become publicly traded, with its common stock expected to be listed on the New York Stock Exchange.
Aerial Ridesharing or Urban Air Mobility
The aerial ridesharing space is gaining momentum with SPACs. On February 10, 2021, Atlas Crest Investment Corp. (NYSE: ACIC), a special purpose acquisition company, announced a deal to merge with Palo Alto-based Archer Aviation, Inc., company and developer of all-electric vertical take-off and landing (eVTOL) aircraft. It is anticipated that the post-closing company, Archer, will be listed on the NYSE with ticker symbol “ACHR.” In December 2020, Blade Urban Air Mobility, Inc., a technology-powered air mobility company, announced today that it will become publicly listed in order to bolster Blade’s growth trajectory within the rapidly growing urban air mobility market and to accelerate its transition from conventional aircraft to eVTOL.Pursuant to the transaction, Experience Investment Corp., which currently holds approximately $275 million cash in trust, will combine with Blade at an estimated $825 million pro forma equity value. The combined company’s available cash will be funded through a combination of Experience Investment Corp.’s cash in trust and a $125 million fully committed common stock PIPE at $10.00 per share, including investment commitments from affiliates of Hedosophia, HG Vora Capital Management, KSL Capital Partners, and David Geffen, as well as original investors Barry Diller, David Zaslav and Robert W. Pittman. Other air taxi competitors include well-funded German startups Volocopter and Lilium.
With more than 1,000 test flights completed over the last 10 years, Joby Aviation has secured a substantial first-mover advantage in the aerial ridesharing industry. In 2020, the Company became the first to agree to a certification basis for an electric vertical takeoff and landing (“eVTOL”) aircraft with the Federal Aviation Administration (“FAA”) and in the same year received the U.S. Air Force’s first ever airworthiness approval for an eVTOL aircraft. Joby Aviation plans to launch commercial operations in the United States in 2024, before scaling its service globally. Air taxi networks can be scaled rapidly and efficiently using existing heliport or airport infrastructure, with the number of routes in a network growing exponentially as new vertiports are introduced.
Uber and U.S. Air Force
In 2020, Toyota Motor Corporation led Joby’s $620 million Series C round, forming a strategic partnership that sees Toyota engineers working shoulder-to-shoulder with Joby on projects such as factory layout and manufacturing process development. Joby Aviation also recently finalized the terms of an enhanced relationship with Uber Technologies, Inc. that sets Joby apart in terms of commercial readiness. Under the agreement, the companies will integrate their respective services into each other’s apps, enabling future customers to enjoy seamless multi-modal travel. Joby also acquired Uber Elevate, a division of Uber focused on the aerial ridesharing market. The acquisition included key personnel and a suite of software tools focused on multi-modal operations management and demand simulation, fed by Uber’s data. In December 2020, the U.S. Air Force granted Joby Aviation its first ever airworthiness approval for an eVTOL aircraft as part of its Agility Prime program, designed to accelerate the commercial adoption of electric aviation.
Transaction
The pro forma implied market capitalization of the combined company is $6.6 billion, at the $10.00 per share PIPE subscription price and assuming no public shareholders of Reinvent exercise their redemption rights. The Company will receive at the time of transaction close up to $690 million in proceeds from Reinvent’s cash in trust and an $835 million private placement of common stock at a $10.00 per share value and will also convert a $75 million convertible note into common stock at a $10.00 per share value. The private placement is led by strategic and institutional investors including The Baupost Group, funds and accounts managed by BlackRock, Fidelity Management & Research LLC and Baillie Gifford. Existing Joby shareholders have agreed to roll 100% of their equity into the new company and will remain majority owners of the combined company at closing. All references to cash on the balance sheet, available cash from the trust account and retained transaction proceeds are subject to any redemptions by the public shareholders of RTP and payment of transaction expenses.
SOURCES
Rollover Equity – US$ 5 billion
Reinvent Technology Partners (Cash Held in Trust) – US$ 690 million
Committed Funding = US$ 835 million PIPE + US$ 75 million Uber convertible note (converts to 7.5 million shares to be issued to Uber).
Joby Aviation bought Uber Elevate in January 2021. Joby will appear in Uber app on a non-exclusive basis and vice-versa.
Advisors
Skadden, Arps, Slate, Meagher & Flom LLP, served as legal advisor to Reinvent. Morgan Stanley & Co. LLC and Allen & Company LLC served as placement agents on the PIPE transaction. Latham & Watkins LLP served as legal advisor and Morgan Stanley & Co. LLC and Allen & Company LLC served as financial advisors to Joby.
