Flexjet, Inc., a global leader in subscription-based private aviation, and Horizon Acquisition Corporation II (NYSE: HZON), a publicly traded special purpose acquisition company, announced a definitive business combination agreement that will result in Flexjet becoming a publicly listed company. Upon the closing of the transaction, Flexjet is expected to be listed on the NYSE under the ticker symbol “FXJ”.
Flexjet is a global leader in the private aviation sector with a full breadth of market offerings that reach private jet users through various branded storefronts that target specific private flying needs. These storefronts include: Flexjet, which focuses on fractional jet ownership and leasing; Sentient Jet, which focuses on jet cards; FXAIR and PrivateFly, which offer on-demand charter programs; as well as Sirio, which focuses on full aircraft ownership.
The company’s subscription-based recurring revenue model provides the basis for predictable revenue and cash flow. This subscription-based recurring revenue comes from a large, committed customer base of ultra-high-net-worth individuals and Fortune 500 corporations through approximately 10,000 committed contracts. Flexjet’s customers are highly loyal, demonstrated through a 97 percent retention rate and long-tenured relationships. Over 35 percent of Flexjet’s fractional customers have been with the company for more than 10 years and 55 percent have been with the Company for more than five years.
The transaction values the combined company at a pro forma enterprise value of $3.1 billion, representing 10.8x projected 2022 Adjusted Management EBITDA of approximately $288 million. The majority of proceeds in the business combination are expected to be held on the company’s balance sheet.
The transaction is backstopped with an up to $300 million common equity capital commitment from Eldridge Industries (an affiliate of Horizon’s sponsor) and Horizon’s sponsor, which consists of $155 million in non-redemption agreements and an up to $145 million redemption back-stop. Upon the closing of the transaction and assuming the full redemption back-stop is utilized, existing Flexjet shareholders (which includes affiliates of Eldridge Industries who are current investors in Flexjet) are expected to own 89 percent of the combined company. In the event there are fewer redemptions from Horizon’s trust account, such ownership percentage would be reduced by existing Horizon public shareholders.
The boards of directors for both Flexjet and Horizon have approved the proposed business combination, which is expected to be completed in the second quarter of 2023, subject to shareholder approvals and other customary closing conditions, as well as successful completion of the pending solicitation of shareholders to extend Horizon’s period to complete a business combination transaction.
