Boeing agreed Monday to sell three of its advanced aviation subsidiaries to Archer Aviation in exchange for an equity stake of nearly 20 percent, exiting direct ownership of the air taxi business it has funded for more than a decade.
The deal covers Wisk Aero, which develops autonomous electric aircraft, the drone manufacturer Insitu, and the airspace software company SkyGrid, Reuters reported. Archer shares rose 21 percent in premarket trading and were up more than 18 percent by Monday morning.
Boeing will receive newly issued Class A shares equal to 19.75 percent of Archer's shares outstanding immediately before closing, subject to adjustments for the acquired businesses' cash, debt and transaction expenses, according to a regulatory filing. Because the calculation uses the pre-closing share count, the stake works out to roughly 16.5 percent of the enlarged company, TechCrunch reported.
Boeing also receives two warrants covering up to $200 million of Archer stock, exercisable over one to four years after closing, and the right to nominate one director to Archer's board. It committed to buy up to $55 million of Archer shares if the company raises at least $400 million in a future offering.
The companies entered a technology-sharing arrangement that preserves Boeing's access to Wisk's autonomous flight systems for its own commercial and defense aircraft.
Insitu brings Archer an immediately profitable business, generating more than $200 million in annual defense revenue with operations across 35 countries. The three units together carry close to two million combined flight hours of operational data.
Brian Yutko, Boeing's vice president for commercial airplanes product development, said the arrangement allows the three businesses to accelerate development while ensuring Boeing capitalizes on two decades of investment through its core operations, CNBC reported.
Archer and Wisk were once opposing parties in a trade secret lawsuit.
Archer is scheduled to report second-quarter earnings after the market closes Monday.