After weeks of surging stock prices for a blank check company rumored to be targeting the acquisition of electric vehicle company Lucid Motors, the two sides officially announced a deal Monday afternoon and the stock plummeted.
Lucid, a vibrant potential Tesla Inc. TSLA,
rival, agreed to combine with Churchill Capital Corp. IV CCIV,
a special takeover company, or SPAC, also known as a blank check company. SPACs gained massive popularity during the COVID-19 pandemic and have been used repeatedly in the electric vehicles and related industries amid a phenomenal rise in Tesla’s valuation.
Lucid and Churchill announced Monday afternoon that they will combine for a $ 11.75 billion transaction capitalization, and have attracted private investment in the deal at $ 15 per share implying a valuation of $ 24 billion. The private investment in a public equity deal, known as a PIPE, and Churchill cash will provide Lucid with approximately $ 4.4 billion in total funding, the parties reported.
However, rumors that the deal would take place had sent Churchill shares much higher than the levels stated in Monday’s announcement, and shares were down more than 25% in off-hours trading. Shares closed at $ 57.37 on Monday. Like all SPACs, Churchill went public at a price per share of $ 10, with most of the gains coming from reports of discussions between Lucid and Churchill.
Lucid is located in Newark, California, a San Francisco Bay Area city next to Tesla’s original Fremont factory. Chief Executive Peter Rawlinson, who will continue to lead the company after the transaction is closed, was the lead engineer on Tesla’s Model S before moving to Lucid.
“Lucid will go public to accelerate into the next phase of our growth as we work towards the launch of our new pure electric luxury sedan, Lucid Air, in 2021, followed by our Gravity performance luxury SUV in 2023,” said Rawlinson in a statement. . “Funding from the transaction will also be used to support the expansion of our production facility in Arizona, the first greenfield purpose-built EV production facility in North America, and is already operational for pre-production builds of the Lucid Air.”
After the investment, Lucid expects to more than double its US workforce, from approximately 2,000 currently to approximately 5,000 by the end of 2022.
Lucid will now be backed by a legion of heavy hitters who go beyond the already significant investment of Saudi Arabia’s public investment fund, which also invests in the 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,” said Monday’s announcement, which claimed that it would be the largest SPAC ever. related ordinary stock PIPE.
Investors in the PIPE agreed not to sell their shares until September 1, otherwise the shares will be registered, whichever is later. Existing investors will face a six-month freeze on their shares. Churchill’s sponsor has agreed not to sell stock for 18 months after closing of the transaction.