RIO DE JANEIRO, BRAZIL – EMBRAER (EMBR3) is poised to engage in the announced merger between Eve Urban Air Mobility (Eve), its electric vehicle vertical take-off and landing unit, with Zanite Acquisition, and also list its subsidiary Eve, with a valuation of US$2 billion, according to Ágora Investimentos analysts.
Optimism in the deal is such that the target price of EMBRAER shares has been raised, with the potential to trigger a high of almost 40%, even after their sharp valuation. Ágora also changed its recommendation from sell to buy.
“We see this potential transaction as likely, given that three mergers and acquisitions involving eVTOLs (electric vertical takeoff and landing vehicles) and SPACs have already been announced by other players with similar valuations since early 2021,″ explain analysts Victor Mizusaki and Wellington Lourenço, who sign the report.
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Zanite Acquisition, a special purpose acquisition company, or SPAC, seeks to raise new capital to finance the transaction with EMBRAER, said sources who chose to remain anonymous.
The deal is expected to value the combined company at about US$2 billion, the sources said.
“If a merger and acquisition occurs, it would be part of EMBRAER’s strategy to invest in new products, but also to share some of the development risk. Zanite raised US$230 million in equity in November 2020, which could be used to support the development of eVTOL aircraft (flying cars in popular jargon),” Ágora analysts note.
There are no details on the business plan yet. EMBRAER, Eve and Zanite have not disclosed details on their business plan.
However, according to Ágora’s estimates, for each US$100 million in the pre-monetary valuation, the target price could change by R$0.69 per EMBRAER share.