and Volatus Aerospace Corp. have announced that they have entered into a business combination agreement to combine the companies in a merger of equals transaction, with the combined company to continue under the name ‘Volatus Aerospace Corp.‘ and, subject to approval of the TSX Venture Exchange, continue trading under the ticker “FLT”.
Under the Merger, which the boards of directors of both companies have approved, the combined company will be led by a board of directors and management team of experienced drone technology industry and business leaders, bringing together the cultures, strengths, and capabilities of both companies.
By joining forces, Volatus and Drone Delivery Canada plan to immediately begin commercialization efforts, which is intended to enhance shareholder value by forging a robust, financially sound enterprise focused on immediate and long-term revenue with a clear path to sustainable growth and market leadership. Subject to customary closing conditions, the Merger is expected to close in the third quarter of 2024.
Pursuant to the Merger, Volatus shareholders will receive 1.785 (the “Exchange Ratio”) Drone Delivery Canada voting common shares (each, a “Drone Delivery Canada Share”) for each Volatus common share (a “Volatus Share”) held (the “Consideration”). Upon closing of the Merger, existing shareholders of Volatus and Drone Delivery Canada will each own approximately 50% of the combined company (based on the current issued and outstanding shares of each of the companies).
Strategic Rationale
To date, Drone Delivery Canada has invested $40 Million into building strong, competitive drone cargo solutions that are now ready to go to market. By focusing on drone services, training, and equipment sales, Volatus is well-positioned to leverage these technologies and bring them to market. As regulations begin to enable the commercialization of drone cargo and remote drone operations, Volatus has been planning to commercialize its efforts in Advanced Air Mobility, adding to its go-to-market strategy.
Without technology such as Drone Delivery Canada’s remote operations centre; Flyte management software; DroneSpot infrastructure; and cargo-focused, commercialized aircraft, the path to competitively enter the Advanced Air Mobility market would require significant research and development (“R&D”) investment for any drone-based services company.
The combined company, with its shared decades of technology and aviation experience as well as strong financial and operating metrics, is expected to have a leading presence globally as a diversified technology and service leader to drive both short- and long-term growth opportunities in existing and new markets. Further, it is expected that the combined company will be able to achieve material cost synergies to support near-term profitability and enhance its margin profile as its revenue profile continues to grow.
Steve Magirias, Chief Executive Officer of Drone Delivery Canada, commented,
“Drone Delivery Canada has been searching for the right partner to join us on our growth journey and we are confident that Volatus is a great fit, from a management vision point of view, industry know-how, and experience. We were initially attracted to Volatus’ strong reputation in the industry, admirable fiscal management through a challenging capital markets environment, and vision towards generating diversified lines of revenue.”
Ian McDougall, Chair of Volatus board of directors, commented,
“We are thrilled to announce this transformative merger with Drone Delivery Canada. Merging with Drone Delivery Canada will enhance our ability to offer cutting edge technology and services to our clients and help position the combined company as a global leader. Volatus sees a tremendous opportunity to commercialize Drone Delivery Canada’s advanced technologies, through our network of partners, Fortune 500, international mining, oil and gas, and utilities clients, further positioning the combined company as a global leader in drone technologies and services.”
Glen Lynch, Chief Executive Officer, President and Director of Volatus, commented,
“We believe that the strategic impact will be significant right out of the gate, and allow us to drive innovative technology advancements and offer our clients industry leading technology and service.”
Leadership and Governance
Following the closing of the Merger, the board of directors of the combined company will consist of seven (7) directors, comprised of three (3) directors from Volatus including Ian McDougall who will act as the Chair of the combined company, two (2) independent directors from Drone Delivery Canada, and two (2) independent directors to be mutually agreed upon at a future date.
Management of the combined company will include executives from both Volatus and Drone Delivery Canada, with Volatus’ current Chief Executive Officer, President and Director, Glen Lynch, assuming the role as Chief Executive Officer of the combined company, and Drone Delivery Canada’s current Chief Executive Officer, Steve Magirias, becoming the Chief Operating Officer of the combined company.
Benefits to Drone Delivery Canada Shareholders
- Pro forma ownership of 50% in the combined company is expected to provide immediate exposure to Volatus’ revenue profile and near-term cash flow generation with attractive long-term growth potential from Drone Delivery Canada’s portfolio of proprietary technology
- Greater access to new geographies and sectors
- Enhanced ability to realize value from an existing proprietary drone technology portfolio via a stronger financial position of the combined company, which is expected to achieve profitability in the near-term
- Accretive to Drone Delivery Canada on key financial and operating metrics
- Significant value upside as the combined company advances its business plan and achieves profitability
Benefits to Volatus Shareholders
- Pro forma ownership of 50% in the combined company is expected to provide Volatus shareholders exposure to Drone Delivery Canada’s advanced operational and proprietary cargo drone technology and remote operating capabilities to enhance Volatus’ existing service offerings
- Market expansion opportunity through enhanced geographic diversification, and entrance into new end markets including the emerging cargo sector, which is expected to have significant long-term upside
- Presents opportunity to leverage the Volatus management team’s strong commercial expertise to ensure optimal commercialization of Drone Delivery Canada’s technology and product portfolio
- Enhanced capital markets profile, supported by Drone Delivery Canada’s strong shareholder base
- Significant re-rating potential as the combined company advances its business plan and achieves near-term profitability
Further Information
Further information regarding the Arrangement will be contained in the joint information circular that Volatus and Drone Delivery Canada will prepare, file and mail in due course to their respective shareholders in connection with the special meetings of each of the Volatus and Drone Delivery Canada shareholders to be held to consider and vote on the Arrangement.
All shareholders are urged to read the information circular once it becomes available as it will contain additional important information concerning the Arrangement. The Business Combination Agreement will be filed on the SEDAR+ profiles of Volatus and Drone Delivery Canada on the SEDAR+ website
Source: Press Release