After weeks of spiking share prices in a blank checking company rumored to be targeting the takeover of electric vehicle company Lucid Motors, the two sides officially announced a deal Monday afternoon and the shares were sank dramatically.
Lucid, a potential buzz from Tesla Inc. TSLA,
rival, agreed to merge with Churchill Capital Corp. IV CCIV,
a special purpose acquisition company, or SPAC, also known as a blank check company. SPACs have become extremely popular during the COVID-19 pandemic and have been used repeatedly in electric vehicles and related sectors amid a phenomenal surge in Tesla’s valuation.
Lucid and Churchill announced Monday afternoon that they will be combined at a transaction capital value of $ 11.75 billion and have attracted private investment in the deal at $ 15 per share, implying a valuation of $ 24 billion. . Private investment in a public equity deal, known as PIPE, and Churchill cash will provide approximately $ 4.4 billion in total funding to Lucid, the parties reported.
However, rumors that the deal would happen had caused Churchill’s shares to go much higher than the levels detailed in Monday’s announcement, and the shares plunged more than 25% in after-hours trading. The shares closed Monday at $ 57.37. Like all SPACs, Churchill went public at a $ 10 share price, with most of the gains coming after reports of discussions between Lucid and Churchill.
Lucid is based in Newark, California, a city in the San Francisco Bay Area next to Tesla’s original factory in Fremont. Chief Executive Officer Peter Rawlinson, who will continue to lead the company after the transaction closes, was Tesla’s Model S chief engineer before leaving for Lucid.
“Lucid is going public to accelerate into the next phase of our growth as we work towards the launch of our new purely electric luxury sedan, Lucid Air, in 2021 followed by our Gravity performance luxury SUV in 2023,” Rawlinson said at a statement. . “The financing from the transaction will also be used to support the expansion of our manufacturing facility in Arizona, which is the first all-new electric vehicle manufacturing facility in North America and is now operational for pre-production versions of Lucid Air. “.
Lucid expects more than twice its American workforce after the investment, from about 2,000 workers today to about 5,000 by the end of 2022.
Lucid will now be backed by a legion of heavyweights beyond his already considerable investment from the Saudi Arabian Public Investment Fund, which is also investing in PIPE. Others involved in the investment include “funds and accounts managed by BlackRock, Fidelity Management & Research LLC, Franklin Templeton, Neuberger Berman, Wellington Management and Winslow Capital Management LLC,” according to Monday’s announcement, which claimed it would be the largest SPAC in the history. PIPE of related common shares.
Investors in PIPE agreed not to sell their shares until September 1 or until the shares are registered, whichever is later. Existing investors will face a six-month lock on their shares. Churchill’s backer agreed not to sell shares for 18 months after the transaction closed.