NEW YORK and BRISTOL,
England, June 10, 2021
/PRNewswire/ --
- Vertical Aerospace is a leading UK-headquartered engineering
and aeronautical business founded in 2016 by energy tech
entrepreneur Stephen Fitzpatrick to
develop electric Vertical Take-Off and Landing (eVTOL)
aircraft.
- Microsoft's M12, American Airlines, Avolon, Honeywell, and
Rolls-Royce all investing via the PIPE. Rocket Internet and
40 North key financial investors.
- American Airlines, Virgin Atlantic, Avolon, Honeywell,
Rolls-Royce, GKN and Solvay all providing individual expertise
through partnerships with Vertical.
- Up to 1000 aircraft pre-orders with launch customers
American Airlines, and Avolon, with pre-order option for Virgin
Atlantic, valued at up to $4bn.
- American Airlines and Vertical expect to work on passenger
operations and infrastructure development in the USA. Virgin Atlantic and Vertical to explore
JV to develop launch of Virgin Atlantic branded short haul eVTOL
network in the UK.
- Outstanding in-house engineering team assembled with
backgrounds from the senior levels of Rolls-Royce, Airbus, UK
Ministry of Defence, Jaguar Land Rover and General Dynamics.
- Targeted profitability and cash flow breakeven with annual
sales of less than 100 aircraft.
- Commercial operations planned for 2024 once certified under
EASA; intends to be certified to same safety standards as
large commercial aircraft.
- Supported by the Broadstone team, with proven investment
track record, delivering 48% IRR and 3.5x MOM returns (based on the
weighted averages from investments during the period March 1993 to date).
- Attractive entry point for investors structured to provide
alignment with founder and sponsor. Stephen
Fitzpatrick to remain largest shareholder.
- Transaction is expected to close in second half of 2021 and
values the combined company at a pro forma enterprise value of
approximately $1.84 billion and pro
forma equity value of $2.2 billion at
the $10.00 per share PIPE price.
Transaction expected to result in gross proceeds of $394 million.
Vertical Aerospace Group Ltd. ("Vertical"), a leading
UK-headquartered engineering and aeronautical business developing
electric Vertical Take-Off and Landing (eVTOL) aircraft, has
entered into a definitive agreement for a business combination with
Broadstone Acquisition Corp. (NYSE: BSN) ("Broadstone"), a special
purpose acquisition company. The transaction will result in
Vertical becoming a publicly-traded company, with a pro forma
equity value of approximately $2.2
billion. Vertical will be listed on the New York Stock
Exchange following the combination, which is expected to close in
the second half of 2021, under the ticker EVTL.
Vertical is also announcing today investments from American
Airlines, Avolon, Honeywell and Rolls-Royce, who have
invested in the PIPE and are part of Vertical's strategic partner
ecosystem; Microsoft's M12, 40 North and Rocket Internet SE have
also invested in the business.
Commercial partnerships and individual conditional pre-orders
have also been agreed with American Airlines, Virgin Atlantic and
Avolon for up to 1,000 aircraft in total, providing a direct route
to market and opportunity to work together on key go-to-market
workstreams.
Vertical's mission is to make air travel personal, on-demand and
carbon-free through designing, manufacturing, selling and servicing
one of the world's best eVTOL aircraft, the VA-X4. It will travel
at speeds over 200mph, be near silent when in flight, produce zero
emissions and at low cost per passenger mile.
The VA-X4 is expected to be certified to the same standards as
large commercial airliners and therefore is expected to be 100x
safer than a helicopter. Vertical intends to certify the VA-X4 to
European Union Aviation Safety Agency (EASA) standards – the most
stringent global standards – in order to unlock a large UAM TAM of
$1 trillion by 2040, with an upside
TAM of $4.4 trillion by
2040[1].
Vertical was founded in 2016 by Stephen
Fitzpatrick, an established entrepreneur best known as the
founder of the Ovo Group, a leading energy company determined to
create a world without carbon and which includes Ovo Energy, the
UK's second-biggest energy retailer with revenues of $6.5 billion. Stephen remains the majority
shareholder in this business.
Over the past five years, Vertical has focused on building an
experienced and senior team in the eVTOL industry who have over
1,200 combined years of experience, and have certified and
supported over 30 different civil and military aircraft and
propulsion systems. This includes:
- Michael Cervenka, former Head of
Future Technologies at Rolls-Royce,
- Eric Samson, former VP
Engineering and Chief Engineer at General Dynamics,
- Tim Williams, former Chief
Engineer of Rolls-Royce,
- Madhu Bhabuta, former Chief Technology Officer of the UK's
Ministry of Defence,
- Dr. Limhi Somerville, former
Technical Manager at Jaguar Land Rover responsible for the cell
facility, battery functional safety and advanced cell
development,
- Paul Harper, former UK Chief
Airworthiness Engineer at Airbus, and
- Eduardo Dominguez, former CEO of
Airbus' Urban Mobility.
By combining this world-class team with a deliberately built
ecosystem of top-tier partners, Vertical has assembled a broad mix
of people and organisations with both commercial track records as
well as experience testing, building and certifying some of the
world's most advanced aircraft.
Vertical's ecosystem approach draws on R&D commitments and
the commercial and manufacturing expertise of partners such as
Rolls-Royce, Honeywell, GKN and Solvay alongside an in-house focus
on high value-add design and proprietary technology, creating an
asset-light business model with highly attractive unit economics.
These strategic partnerships accelerate Vertical's path to
certification, de-risk execution, allow for a lean cost structure,
and will enable production at scale.
As a result of this, Vertical is able to achieve profitability
and cash flow breakeven with annual sales of less than 100 aircraft
(calculated as number of aircraft sales required to reach positive
net income and cash flow in 2024).
American has agreed to pre-order, subject to certain conditions
precedent and future agreed upon milestones, up to 250 aircraft,
and an option to order an additional 100 aircraft. Avolon has
agreed to pre-order up to 310 aircraft with an option for a further
190, and Virgin Atlantic has an option to purchase between 50 and
150 aircraft.
In addition, all parties will work together towards the prompt
certification and deployment of aircraft in commercial operations.
In the United States of America,
American Airlines expects to work with Vertical on passenger
operations and infrastructure development. In the United Kingdom, Virgin Atlantic and Vertical
expect to work together to explore the joint venture launch of a
Virgin Atlantic branded short haul eVTOL network, including
operations and infrastructure development.
Stephen Fitzpatrick, Vertical CEO
and Founder, said: "This is the most exciting time in aviation
for almost a century; electrification will transform flying in the
21st century in the same way the jet engine did 70 years ago.
Today's announcement brings together some of the largest and most
respected technology and aeronautical businesses in the world and
together we can achieve our aim of making the VA-X4 the first zero
carbon aircraft that most people will fly on. The United Kingdom is already a global leader in
aerospace innovation and we believe Vertical Aerospace will be the
British engineering champion to drive the aviation industry
forward."
Derek Kerr, Chief Financial
Officer, of American Airlines said: "Emerging technologies are
critical in the race to reduce carbon emissions and we are excited
to partner with Vertical to develop the next generation of electric
aircraft. For years, American has led the industry in investing in
newer, more fuel-efficient aircraft. Today's partnership is another
example of that commitment, and an investment in the future of air
mobility. We are excited about the prospect of what this could mean
for our customers, and our company."
Dómhnal Slattery, CEO of Avolon, the world's second largest
aircraft lessor, said: "Avolon is proud to be a launch customer
for the VA-X4 aircraft, demonstrating our commitment to a net zero
carbon economy and to driving innovation in the global aviation
sector. Our order with Vertical will also accelerate the inevitable
commercial roll-out of zero emissions aircraft. Before the end of
this decade, we expect zero emission urban air mobility, enabled by
eVTOLs, to play an increasingly important role in the global
commercial aviation market."
Shai Weiss, CEO of Virgin
Atlantic, said: "With innovation and sustainability leadership
firmly in our DNA, we are excited to be partnering with Vertical
Aerospace to pioneer sustainable and zero emissions air travel in
the UK. We pride ourselves on building enduring strategic
partnerships and are thrilled to be working alongside Vertical in
its mission to bring eVTOL travel to the UK. Our partnership
includes an option for Virgin Atlantic to acquire up to 150 eVTOL
VA-X4 aircraft and exploration of a Joint Venture to bring short
haul, electric vehicle connectivity to cities and our UK airport
hubs, starting with London Heathrow as well as Manchester and London Gatwick. Combining the
design, engineering and manufacturing expertise of Vertical with
the award-winning customer experience and operational excellence of
Virgin Atlantic."
Broadstone was founded by British entrepreneurs Hugh Osmond, Marc
Jonas and Edward Hawkes, who
have led and managed investments in excess of £10 billion over a
20-year period and delivered an IRR of 48% and equity multiple of
3.5x (based on the weighted averages from investments during the
period March 1993 to date). The
Broadstone team has a proven track record of identifying markets
ready for innovation and disruption and backing exceptional
management teams to create industry leading businesses, across
sectors and generating outstanding returns for investors. The
strength of the Vertical leadership team, coupled with a highly
commercial approach and a clear route to market, are among the key
attractions for the Broadstone investment team.
Hugh Osmond, Chairman of
Broadstone, said: "Transportation is one of the next big sectors
of the global economy to be disrupted at scale. Vertical has a
clear commercial plan to challenge short-haul air travel, and to
create new markets where neither cars nor public transport can cope
with demand. Stephen has built an outstanding management and
engineering team with extensive experience in navigating the
aviation regulatory approval processes. The team also has an
outstanding track record of delivering projects commercially. In
our assessment, Vertical has a considerable lead over competitors
in this field – and has a clear business model to achieve
commercialisation and significant growth."
Mike Madsen, President and CEO of
Honeywell Aerospace, said: "Vertical and Honeywell are great
partners because our relationship combines the strengths of both
companies. Honeywell brings state-of-the-art flight controls and
avionics systems, and the Vertical team has a tremendous history of
innovation and design excellence. We're doing more than just
developing an aircraft, we're actually creating an industry
together."
Warren East, CEO of Rolls-Royce,
said: "We are delighted to build on our relationship with
Vertical Aerospace as they take this strategic step to deliver
eVTOL aircraft to a global market. Rolls-Royce is the leading
supplier of all-electric and hybrid-electric power and propulsion
systems for aviation and this exciting opportunity demonstrates our
joint ambitions to lead the way in the new Urban Air Mobility
market."
Clare Barclay, CEO of Microsoft
UK, said, "M12's investment in Vertical Aerospace demonstrates
the market opportunity in the growing demand for urban
transportation, but historically, expanding mobility hasn't been
environmentally sustainable. Automation and Industry 4.0 is a clear
way forward to realize more operational efficiencies and mitigate
transportation congestion and pollution."
Key Transaction Terms
The business combination values the combined company at a pro
forma enterprise value of approximately $1.8
billion and pro forma equity value of $2.2 billion at the $10.00 per share PIPE price. The boards of
directors of both Broadstone and Vertical have approved the
proposed transaction, which is expected to be completed in the
second half of 2021, subject to, among other things, the approval
by Broadstone's shareholders and satisfaction or waiver of the
other conditions stated in the definitive documentation. The
transaction is expected to result in gross proceeds of $394 million.
The ordinary share PIPE includes commitments from institutional
investors, 40 North and Microsoft's M12 as well as the
following strategic investors: American Airlines, Avolon,
Rolls-Royce and Honeywell.
Additional information about the proposed transaction, including
a copy of the merger agreement and investor presentation, will be
provided in a Current Report on Form 8-K to be filed by Broadstone
with the Securities and Exchange Commission and available at
www.sec.gov.
Advisors
Winston & Strawn LLP is serving as legal advisor and Citi is
serving as advisor to Broadstone. Latham & Watkins LLP is
serving as legal advisor and Barclays is serving as lead financial
advisor and lead capital markets advisor to Vertical. Barclays and
Citi acted as joint placement agents on the PIPE.
Investor Call
Vertical and Broadstone will host a joint investor conference
call to discuss the proposed transaction today, 10 June 2021 at 18:00
ET.
To listen to the prepared remarks via telephone dial
1-877-407-9039 (U.S.) or 1-201-689-8470 (International) and an
operator will assist you. A telephone replay will be available at
1-844-512-2921 (U.S.) or 1-412-317-6671 (International), passcode:
13720391 through 24th, June, 2021, 11:59 PM
ET.
About Vertical Aerospace
Vertical Aerospace's mission is to make air travel personal, on
demand and carbon free. The company has an unrivalled top-tier
partner ecosystem and is backed by American Airlines, Avolon,
Rolls-Royce and Honeywell among others. Vertical's partnerships
de-risk execution and its pathway to certification, allow for a
lean cost structure, and enable production at scale. With projected
speeds over 200mph, near silent when in flight, zero emissions and
low cost per passenger mile, the VA-X4 is expected to open up urban
air mobility to a whole new range of passengers and transform how
we travel.
About Broadstone Acquisition Corp.
Broadstone Acquisition Corp. (NYSE: BSN) was set up by serial
entrepreneurs, operators and investors, Hugh Osmond, Edward
Hawkes and Marc Jonas. It was
established to combine with a UK/European business with a strong
management team, significant growth prospects, and the opportunity
to become a market leader in its sector.
Broadstone's executive team has an extensive track record in
value creation. The combination of a strong internal team, a
network of external resources and the experience of the management
team enables us to support rapid, substantial, and lasting
growth.
Contacts
For Vertical
Investors:
- investors@vertical-aerospace.com
Media
Vertical UK - Nepean
- Gavin Davis, +44 7910
104660
- Samuel Emden, +44 7816
459904
- nepeanverticalteam@nepean.co.uk
Vertical US - ICR
- Phil Denning / Dan McDermott
- VerticalMedia@icrinc.com
For Broadstone - Edelman
- Iain Dey, +44 7976 295906
- Raeesa Chowdhury-King, +44 7885
802774
- Broadstone@Edelman.com
Media Package
Media package download link
Additional Information and Where to Find It
In connection with the proposed business combination, Broadstone
intends to file a Registration Statement on Form F-4, including a
preliminary proxy statement/prospectus and a definitive proxy
statement/prospectus with the SEC. Broadstone's shareholders and
other interested persons are advised to read, when available, the
preliminary proxy statement/prospectus and the amendments thereto
and the definitive proxy statement/prospectus and documents
incorporated by reference therein filed in connection with the
proposed business combination, as these materials will contain
important information about Vertical, Broadstone, and the proposed
business combination. When available, the definitive proxy
statement/prospectus and other relevant materials for the proposed
business combination will be mailed to shareholders of Broadstone
as of a record date to be established for voting on the proposed
business combination. Shareholders will also be able to obtain
copies of the preliminary proxy statement/prospectus, the
definitive proxy statement/prospectus, and other documents filed
with the SEC that will be incorporated by reference therein,
without charge, once available, at the SEC's website at
www.sec.gov, or by directing a request to:
info@broadstoneacquisitioncorp.com.
Participants in Solicitation
Broadstone and its directors and executive officers may be
deemed participants in the solicitation of proxies from
Broadstone's shareholders with respect to the business combination.
A list of the names of those directors and executive officers and a
description of their interests in Broadstone will be included in
the proxy statement/prospectus for the proposed business
combination and be available at www.sec.gov. Additional information
regarding the interests of such participants will be contained in
the proxy statement/prospectus for the proposed business
combination when available.
Vertical and its directors and executive officers may also be
deemed to be participants in the solicitation of proxies from the
shareholders of Broadstone in connection with the proposed business
combination. A list of the names of such directors and executive
officers and information regarding their interests in the proposed
business combination will be included in the proxy
statement/prospectus for the proposed business combination, which
will be made available as noted in the above paragraph.
Cautionary Statement Regarding Forward-Looking
Statements
This press release includes "forward-looking statements" within
the meaning of the "safe harbor" provisions of the United States
Private Securities Litigation Reform Act of 1995. Broadstone's and
Vertical's actual results may differ from their expectations,
estimates, and projections and, consequently, you should not rely
on these forward-looking statements as predictions of future
events. Words such as "expect," "estimate," "project," "budget,"
"forecast," "anticipate," "intend," "plan," "may," "will," "could,"
"should," "believes," "predicts," "potential," "continue," and
similar expressions (or the negative versions of such words or
expressions) are intended to identify such forward-looking
statements. These forward-looking statements include, without
limitation, Broadstone's and Vertical's expectations with respect
to future performance and anticipated financial impacts of the
proposed business combination, the satisfaction of the closing
conditions to the proposed business combination, and the timing of
the completion of the proposed business combination. These
forward-looking statements involve significant risks and
uncertainties that could cause the actual results to differ
materially from those discussed in the forward-looking statements.
Most of these factors are outside Broadstone's and Vertical's
control and are difficult to predict. Factors that may cause such
differences include, but are not limited to: (1) the occurrence of
any event, change, or other circumstances that could give rise to
the termination of the definitive merger agreement (the
"Agreement"); (2) the outcome of any legal proceedings that may be
instituted against Broadstone and Vertical following the
announcement of the Agreement and the transactions contemplated
therein; (3) the inability to complete the proposed business
combination, including due to failure to obtain approval of the
shareholders of Broadstone and Vertical, certain regulatory
approvals, or satisfy other conditions to closing in the Agreement;
(4) the occurrence of any event, change, or other circumstance that
could give rise to the termination of the Agreement or could
otherwise cause the transaction to fail to close; (5) the ability
to implement business plans, forecasts and other expectations after
the completion of the business combination, and identify and
realize additional opportunities; (6) the potential inability of
Vertical to produce or launch aircraft in the volumes and on
timelines projected, (7) the potential inability of Vertical to
obtain the necessary certifications on the timelines projected; (8)
the potential that certain of Vertical's strategic partnerships may
not materialize into long-term partnership arrangements, (9) the
impact of COVID-19 on Vertical's business and/or the ability of the
parties to complete the proposed business combination; (10) the
inability to list Vertical's ordinary shares on the NYSE
following the proposed business combination; (11) the risk that the
proposed business combination disrupts current plans and operations
as a result of the announcement and consummation of the proposed
business combination; (12) the ability to recognize the anticipated
benefits of the proposed business combination, which may be
affected by, among other things, competition, the ability of
Vertical to grow and manage growth profitably, and retain its key
employees; (13) costs related to the proposed business combination;
(14) changes in applicable laws or regulations; (15) the
possibility that Vertical or Broadstone may be adversely affected
by other economic, business, and/or competitive factors; and (16)
other risks and uncertainties indicated from time to time in the
final prospectus of Broadstone for its initial public offering and
the proxy statement/prospectus relating to the proposed business
combination, including those under "Risk Factors" therein, and in
Broadstone's other filings with the SEC. Broadstone cautions that
the foregoing list of factors is not exclusive. Broadstone cautions
readers not to place undue reliance upon any forward-looking
statements, which speak only as of the date made. Broadstone does
not undertake or accept any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
to reflect any change in its expectations or any change in events,
conditions, or circumstances on which any such statement is
based.
No Offer or Solicitation
This press release shall not constitute a solicitation of a
proxy, consent, or authorization with respect to any securities or
in respect of the proposed business combination. This press release
shall also not constitute an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of
securities in any states or jurisdictions in which such offer,
solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended, or an exemption therefrom.
[1] Morgan Stanley, eVTOL/Urban Air Mobility TAM
Update, May 2021
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SOURCE Broadstone Acquisition Corp.