Joby Aviation, Inc. confirmed on Monday that it has entered into a definitive agreement with Blade Air Mobility In. to purchase the company's urban air mobility passenger business. Blade's medical division was not included in the transaction and will remain a separate public company. As part of the transaction, Joby will become the preferred VTOL partner to Blade's organ transport business.

Shares of Blade Air Mobility rallied 29% in Monday trading. Joby Aviation was up 13%.

Under the terms of the agreement, Joby will pay Blade stock or cash, at Joby’s election, up to $125 million, subject to customary indemnity provisions and inclusive of $35 million of holdbacks, which will be released subject to the achievement of certain performance milestones and retention of certain key employees.

By utilizing Blade's existing infrastructure and gradually transitioning a large loyal base of passengers from conventional helicopters to next-generation Joby aircraft, Joby Aviation expects to be able to accelerate its commercialization while reducing infrastructure investment requirements and customer acquisition costs. In addition to unlocking immediate market access and infrastructure across key urban corridors in New York City and Southern Europe, the acquisition is anticipated to allow Joby to combine its best-in-class technology with Blade's decade of experience delivering premium customer transportation at scale.

"This is a strategically important acquisition that will support the successful launch of Joby’s commercial operations in Dubai, our subsequent global rollout, and our continued leadership in the sector," stated Joby Aviation CEO JoeBen Bevirt.

The transaction is expected to close in the coming weeks, subject to satisfaction or waiver of customary closing conditions.