- German aviation start-up Lilium has agreed to go public through a merger with Qell Acquisition, a special purpose acquisition company founded by former General Motors executive Barry Engle.
- It's the latest deal for the urban air mobility industry following announced SPAC agreements involving Archer Aviation and Joby Aviation.
- The post-merged company is expected to receive approximately $830 million from the deal.
It's the latest deal for the urban air mobility industry following announced SPAC agreements including Archer Aviation and Joby Aviation. A SPAC is a blank-check company, formed as an alternative to an IPO, because it raises funds to buy something but doesn't have any operations of its own. They have no assets other than cash and they trade on a stock exchange before merging with private companies.
The transaction, which officials announced Tuesday, implies a pro-forma enterprise value of $2.4 billion and a pro-forma equity value of $3.3 billion for the combined company. The post-merged company is expected to receive approximately $830 million from the deal, including $450 million from a fully committed common stock PIPE offering and $380 million cash held in trust.
The deal is expected to close in the second quarter, at which point the combined company will trade on the Nasdaq exchange under LILM.
Daniel Wiegand, CEO and co-founder of Lilium, said the funding should provide the company with enough capital to reach its targeted commercial launch in the U.S. and Europe beginning in 2024. The company has previously raised $400 million, he said.
"This is going to give us both a lot of expertise and operational knowledge from Barry and his team, but also the financing to achieve the type of certification and market entry with our airplane," Wiegand told CNBC. "It's a tremendously big and important step for us as a company."
Lilium is developing a seven-seat, electric vertical takeoff and landing aircraft. Some have characterized , eVTOLs as electric air taxis or "flying cars." The company plans to primarily focus on intercity flights rather than shorter in-city trips other companies have discussed doing. Its target launch markets are Florida and Germany.
Engle, who was head of GM's North American operations before leaving the company in August, described Lilium's product as "a highly engineered aircraft." He said its proprietary technology as well as the team Wiegand has built, including Tom Enders, a board member and former CEO of Airbus, were main reasons for seeking the deal.
"It's a team that knows what they're doing and is able to actually execute what admittedly is a very bold, very ambitious agenda," Engle said. "We've done our homework, we've done a ton of due diligence and we couldn't be more pleased and more proud to put our name on this one."
Lilium expects to begin generating revenue in 2024 and achieve a pretax adjusted profit in 2025, according to Engle and Wiegand. The company expects revenue of $3.3 billion by 2026, followed by nearly $5.9 billion in 2027.
SPACs became an increasingly popular way for companies — particularly prerevenue start-ups — to go public in the past year. They were almost guaranteed to pop on the first day of becoming a public company, but not any longer. The first-day return of U.S. SPACs dropped to near zero in March from 5.4% in February and 6.1% in January, according to data from University of Florida finance professor Jay Ritter.
Engle and Wiegand said they are not worried about the short-term volatility or performance of shares, which for Qell are down about 13% since Bloomberg News reported March 3 the SPAC and Lilium were in talks to merge.
"We think this is one that will stand the test of time," Engle said. "A little bit of short-term volatility is not something that we're concerned about. We're building a business here that is going to grow over, literally, decades. Along the way there will be both good markets and bad, but this will endure."
JPMorgan Securities and Barclays are acting as financial and capital markets advisors to Qell. Citi is acting as exclusive financial advisor to Lilium. The three financial institutions are acting as lead placement agents for the PIPE transaction.
Investors in the PIPE include Baillie Gifford, BlackRock, Tencent and Ferrovial.
— CNBC's Yun Li contributed to this report.