Archer Aviation Acquires Boeing Businesses to Fuel Defense Expansion

Archer Aviation has made significant strides in recent weeks, including a major deal with aerospace giant Boeing. The two companies have agreed to a partnership where Archer will acquire three Boeing businesses: Wisk Aero, Insitu, and SkyGrid. In exchange for these deals, Boeing will receive a 19.75% stake in Archer's Class A shares.

The acquisition is expected to boost Archer's defense business, which has been gaining momentum in recent months. The company has worked with the U.S. Department of Defense for years and has established a strategic partnership with Anduril, a defense technology company. This partnership has led to the development of an autonomous platform and its military variant, Thunder.

The deal also includes Wisk Aero, which has completed over 1,700 flight tests of its own eVTOLs. Insitu, another business being acquired by Archer, generates over $200 million in annual revenue from manufacturing and fielding uncrewed aircraft systems (UAS). This acquisition is expected to diversify Archer's business and improve its long-term growth story.

However, the deal comes with a cost - dilution. Investors will own a smaller percentage of Archer once the deal is done, and Boeing has two warrants that could cause further dilution in the future.