It's been barely a week since Brazilian aircraft maker Embraer (ERJ 0.34%) announced that it's getting into the air taxi business, with its Eve Urban Air Mobility Solutions subsidiary striking a deal to sell 200 electric vertical takeoff and landing (eVTOL) aircraft to helicopter travel services provider Halo. But on Thursday morning, Embraer shareholders are reaping a windfall benefit from that deal. Its stock was up by 13.7% as of 11:30 a.m. EDT on news that it may spin off the Eve subsidiary in a deal with a SPAC.
As the company announced, Eve "has started negotiations related to a possible business combination with Zanite Acquisition Corp. (ZNTE), a U.S. publicly traded special purpose acquisition company (SPAC)."
Embraer revealed the plan in response to an article just published by Bloomberg that suggested the value of an Eve-Zanite combination could be as much as $2 billion. In this regard, Embraer cautioned that it has only just begun to negotiate with Zanite, and that it "cannot predict if Eve will reach a definitive agreement or what will be the terms thereof."
This deal might make sense. As Bloomberg pointed out, SPAC Reinvent Technology Partners is looking to bring eVTOL start-up Joby Aviation public, Qell Acquisition wants to do the same thing with Lilium GmbH, and Atlas Crest Investment is looking to pair up with Archer Aviation.
Valuations in those three deals have been estimated at anywhere from $3.3 billion to $5.7 billion, so at first glance, Bloomberg's suggestion of a $2 billion valuation for Eve may seem a bit lowball. Then again, valuations across the SPAC sector have collapsed in recent weeks.
With a contract already in hand to sell 200 air taxis, even at a $2 billion valuation, Embraer's Eve could end up being one of the strongest companies in this emerging sector of the aerospace industry.