Archer Aviation Has $6.9 Million of Revenue. It's Buying a Boeing Business With More Than $200 Million.
Key Points
Archer will issue Boeing new stock equal to 19.75% of its shares outstanding just before closing, leaving Boeing with about 16.5% of the company.
Insitu alone adds more than $200 million of annual revenue, about 29 times Archer's trailing-12-month total of $6.9 million.
The deal is expected to close by the end of 2026, subject to antitrust and national-security approvals.
Archer Aviation (NYSE: ACHR) is buying Boeing's (NYSE: BA) Wisk Aero, Insitu, and SkyGrid subsidiaries, and the price is a piece of itself. At closing, Archer will issue Boeing new stock equal to 19.75% of its shares outstanding just before the deal completes -- which leaves Boeing owning about 16.5% of the company, or about a sixth.
The sixth buys a revenue base Archer doesn't have. Insitu, a maker of unmanned military aircraft used by the armed forces of 35 nations, brings more than $200 million of annual revenue -- profitable revenue, Boeing's release notes.
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Archer's own trailing-12-month revenue is $6.9 million. The acquired revenue is about 29 times that.
Wisk Aero builds autonomous aircraft, and SkyGrid runs digital airspace-management software. Neither's revenue was disclosed.
Image source: Getty Images.
The rest of the terms
Boeing also receives two warrants, each covering about $100 million of stock, struck at $13.00 and $17.88 per share. It gains the right to nominate a director. And it agreed to buy up to $55 million of stock in a future Archer offering of at least $400 million, at Archer's election.
The deal is expected to close by the end of 2026, pending the antitrust waiting period and national-security approvals.
Of course, stock is a currency that moves. The 19.75% is fixed as a slice of the share count, not as a dollar figure, so what the sixth ends up costing Archer's current owners depends on where the stock trades at closing.
For scale, Archer's market value is about $4.8 billion, so the new shares Boeing is taking were worth about $950 million at Monday's close. The company's second-quarter revenue was $5.0 million, its net loss $263.2 million, and its cash and investments $1.56 billion.
Existing shareholders end up owning about a sixth less of a company with far more revenue in it. What the stock rides on, though, hasn't changed. Archer's valuation still rests mostly on Midnight, its electric air taxi -- the acquired businesses account for about $200 million of annual revenue at a company valued near $4.8 billion. What Wisk and SkyGrid grow into could change that arithmetic. For now, the rest of the valuation is still the aircraft.
Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing. The Motley Fool has a disclosure policy.