Atlas Crest Investment Corp (NYSE: ACIC) announced its intention to merge with Urban Air Mobility company Archer. The news of the merger sent ACIC stock surging over 20% to a 52 week high of $15.75. The SPAC merger is expected to provide the merged company $1.1 billion of gross proceeds to fund future growth. This article will breakdown everything you need to know about the ACIC – Archer merger.
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Key details of the ACIC Archer merger
Firstly, the merger is expected to take place in the second quarter of 2021. In addition, the transaction will see both companies trade under the new ticker “NYSE:ACHR”. The merger between Atlas Crest and Archer is valued at approximately $3.8 billion pro-forma. Archer will receive $1.1 billion in gross proceeds to be used to fund Archer’s development to commercialisation and achieve positive cash flow. The company also recently signed an aircraft purchase agreement and collaboration agreement with United Airlines.
“As we look towards the next era of sustainable travel and work, it’s important to invest in companies with a firm vision for change, without sacrificing efficiency or innovation…We’re dedicated to partnering with disruptive, world-class companies undergoing transformational growth. Archer’s dedication to swift, sustainable mobility is coming to life and it’s a journey we’re thrilled to be a part of.”said Ken Moelis, Chairman of Atlas Crest and Chairman and CEO of Moelis & Company.
What to expect from the ACIC Archer merger in 2021?
Firstly, Archer is a leading Urban Air Mobility (UAM) company and developer of electric vertical take-off and landing (eVTOL) aircraft. Furthermore, Archer is developing the first Electric UAM platform that will transport people throughout cities worldwide. In fact, Archer is the only eVTOL company in the world with a contract from a major airline. Archer are confident they can secure a portion of the $1 Trillion UAM market. So here’s what to expect from Archer in 2021.
Atlas Crest (NYSE:ACIC)
Although there is still hurdles for Atlas Crest and Archer to jump prior to the merger, investors are confident in the companies outlook. ACIC stock has gained 33% over the past month. Similarly, we have seen a pattern of SPAC companies gaining after merger announcements and continuing this momentum as it closes in on the merger. It will be interesting to see if ACIC will follow this pattern for the remainder of Q1 2021.
Archer revenue forecasts and outlook for 2021
Firstly, its important for investors to understand the key forecasts for Archer moving into 2021 and beyond. Archers deal with United Airlines has an agreed purchase of $1 Billion worth of Archer’s aircraft with an additional $500 Million option. Looking long term, the company expects to generate $42 million in 2024 and $1.04 Billion by 2025. The sharp inclination in revenue YOY is due to deliveries beginning in 2024. In addition, Archer expect revenue to double in 2026 to $2.2 Billion and to hit $12.3 Billion in 2030. The revenue catalysts include the expansion of industries to utilise the OEM model. This includes military, emergency services, cargo, business travel and expansion into Asia and the Middle East.
Summary on ACIC merger with Archer
We remind our viewers that this article is not financial advice but rather investment commentary from extensive research.
In conclusion, the ACIC – Archer merger looks to provide investors an opportunity to enter the UAM market. The merger will provide a strong influx of cash proceeds to assist in implementing Archer’s business model. Furthermore, Archers revenue outlook for 2024 (delivery date) and beyond is currently bullish according to Archers estimates. The year-on-year revenue growth is forecasted between 30%-60% for 2025-2030. However, the company won’t delivery its first Aircraft until 2024. This does expose investors as there is no revenue flowing into the business for the next 36 months or so. Therefore, we may see some volatility as the company becomes public and PIPE investors cash in.
Written by Tyger Fitzpatrick at Youth Investment Group.
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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