According to reports from Reuters, Archer Aviation shares surged over 21% in Monday's pre-market trading following the announcement of definitive agreements to acquire Boeing's electric aircraft business Wisk Aero and two other subsidiaries in exchange for a nearly 20% stake in Archer. The stock had entered the session down 26% year-to-date through Friday's close, with today's jump materially narrowing that loss. The deal includes drone manufacturer Insitu and airspace-services provider SkyGrid, giving Archer access to Boeing's autonomous-flight technology and potentially strengthening its position in defence and commercial logistics. The three units bring nearly two million combined flight hours, with Insitu being a profitable defence and uncrewed aircraft systems business generating over $200 million in annual revenue across 35 nations and having built more than 3,500 uncrewed aircraft systems fielded by armed forces of 35 nations.
As reported in the latest SEC filing, the acquisition includes Class A shares equal to 19.75% of pre-close shares subject to cash adjustments, plus two warrants totaling $200 million notional with strikes of $13.00 and $17.88. The deal features a 12-month lock-up for Boeing, a 19.9% beneficial ownership cap on exercises, and customary closing conditions with an outside date of May 9, 2027. Related agreements include registration rights, a governance side letter with a board designee, an IP cross-license, a transition services framework, a forward equity purchase option of up to $55 million, and post-close restrictive covenants. Boeing will receive 19.75% of Archer's outstanding Class A stock prior to closing plus warrants and the right to appoint a director to its board, while retaining access to Wisk's technology for its commercial and defence aircraft programmes.
According to Reuters, Archer, which has yet to generate significant revenue from its core business, will acquire Insitu, a profitable defence company with annual revenue of more than $200 million. Archer CEO Adam Goldstein stated that the deal would allow the company to "start generating significant revenue immediately in a major growth market." He added that demand for intelligence, surveillance and reconnaissance drones was likely at a record high, creating a major opportunity for an established business already generating revenue and cash flow. As commercial launches take longer than expected, eVTOL companies are increasingly targeting military, cargo and government applications to generate near-term revenue and secure funding. The acquisition instantly turns a pre-revenue eVTOL startup into a company with a profitable defense business, steadying the balance sheet with real manufacturing and contracts, which until now were mostly a splashy unveiling and a stock pop.
As reported by Reuters, the deal is expected to close by year-end, pending Hart-Scott-Rodino antitrust review, with Moelis & Company serving as financial advisor to Archer and JPMorgan Chase advising Boeing. The assets are designed to feed Archer's ZEE AI foundation model, creating what the company calls an end-to-end "physical AI" platform spanning commercial aerospace, defence, and air traffic management. CEO Adam Goldstein called the transaction "the next big step forward in becoming a diversified platform." The "physical AI" branding is doing significant work, as Archer just bought its way from pre-revenue promise to a real defense business with $200 million in revenue and drones flying in 35 countries. The deal accelerates a defense pivot Archer started in late 2024, when it partnered with Anduril to build a hybrid VTOL military aircraft and raised $430 million. Last month, the two unveiled Thunder, a jointly developed autonomous VTOL aircraft for defense and commercial missions.
There's significant history between the companies, as Wisk sued Archer in 2021, accusing it of stealing trade secrets, in a bitter multi-year court fight that was settled on August 10, 2023, with Boeing investing in Archer's funding round and the companies agreeing to collaborate on autonomy. Now Archer owns Wisk outright. The move accelerates the advent of eVTOLs, though analysts remain skeptical about the company's focus shift. Archer's core business continues moving forward, having begun piloted operations of its flagship Midnight aircraft last year and being the exclusive air taxi provider for the 2028 LA Olympics. However, there's a real chance that the focus on defense business could detriment the promise of commercial electric flight, as the company has burned cash for years chasing FAA certification. The deal represents a watershed moment for Archer and the future of physical AI in aerospace and defense, with Boeing's VP of Commercial Airplanes Product Development Brian Yutko stating the transaction is a win-win for both companies, allowing Wisk, SkyGrid and Insitu to accelerate capability development and time to market.
