(Reuters) – Luxury electric vehicle maker Lucid Motors Inc is closing in on a deal to go public with a valuation of roughly $ 12 billion after veteran negotiator Michael Klein’s blank check acquisition firm launched a financial effort to back the transaction, people familiar with the matter said Tuesday.
The merger between Lucid and Klein’s Churchill Capital IV Corp would be the largest in a series of deals from electric vehicle manufacturers such as Nikola Corp and Fisker Inc that have gone public by combining with special purpose acquisition companies (SPACs).
Churchill Capital IV has started talks with investors to raise more than $ 1 billion by selling shares in a private investment in public equity (PIPE) transaction for the Lucid deal, sources said. The size of the PIPE could reach $ 1.5 billion or more depending on investor demand, one added.
These funds would add to the $ 2 billion that Churchill Capital IV raised in an initial public offering (IPO) in July on the New York Stock Exchange. Lucid and Klein agreed on the key terms of the deal, according to sources.
If the PIPE fundraiser concludes successfully, a deal could be announced earlier this month, according to the sources, who requested anonymity to discuss confidential details. Churchill Capital IV declined to comment. Lucid did not immediately respond to a request for comment.
Shares of Churchill Capital IV soared on the news and were trading around 30% at $ 52.20.
Lucid, founded in 2007 as Atieva Inc by former Tesla executive Bernard Tse and businessman Sam Weng, makes luxury electric vehicles. It was initially funded by Chinese and Silicon Valley venture investors, with additional funding from backers such as state-owned Chinese automaker BAIC Motor and Chinese technology company LeEco.
To help finance the construction of a US assembly plant in Casa Grande, Arizona, Lucid was fueled by a $ 1 billion investment in 2018 from the Saudi Arabia Public Investment Fund.
Churchill Capital IV’s stock price has risen more than 300% since Bloomberg News reported in January that it was in talks to merge with Lucid.
SPACs like Churchill IV are shell companies that raise money in an IPO to merge with a private company that, as a result, goes public.
The merger with a SPAC has emerged as a popular IPO alternative for companies looking to go public with less regulatory scrutiny and more certainty about the valuation that will be obtained and the funds that will be raised.
Investors interested in SPACs are on the hunt for electric vehicle startups, hoping to snag the next Tesla Inc.While some deals like Fisker have paid off for SPAC investors, others like Nikola have quit. to your short-term earnings.
Klein has raised a number of SPACs that have made deals for companies such as healthcare services company MultiPlan Corp and analytics company Clarivate Plc.
Reporting by Joshua Franklin in Miami and Anirban Sen in Bangalore; Editing by David Gregorio and Nick Zieminski