After a few weeks of rising stock prices for a company with an incomplete check that is rumored to target the acquisition of electric vehicle company Lucid Motors, the two sides officially announced an agreement on Monday afternoon, and the stock fell sharply.
Lucid, a buzzy potential Tesla Inc. TSLA,
rival, agreed to merge with Churchill Capital Corp. IV CCIV,
a special purpose purchasing company, or SPAC, also known as a blank check company. SPACs became extremely popular during the COVID-19 pandemic and were used repeatedly in electric vehicles and related sectors, amid a phenomenal increase in Tesla valuation.
Lucid and Churchill announced Monday afternoon that they will combine at a transaction value of $ 11.75 billion and attracted private investment in the transaction at $ 15 per share involving a valuation of $ 24 billion. Private investment in a public capital agreement, known as PIPE, and Churchill’s cash will provide about $ 4.4 billion in total funding for Lucid, the parties reported.
Rumors that the transaction will happen sent Churchill shares much higher than the levels detailed in Monday’s announcement, but shares rose more than 25% in post-program trading. Shares closed at $ 57.37 on Monday. Like all SPACs, Churchill went public at a price of $ 10 per share, with most of the earnings coming from discussion reports between Lucid and Churchill.
Lucid is based in Newark, California, a town in the San Francisco Bay Area near the original Tesla factory in Fremont. CEO Peter Rawlinson, who will continue to lead the company after the transaction closes, was the chief engineer of the Tesla S model before leaving for Lucid.
“Lucid will go public to accelerate the next phase of our growth as we work towards launching our new pure-electric luxury sedan, Lucid Air, in 2021, followed by our Gravity performance SUV in 2023,” he said. Rawlinson in a statement. “Transaction funding will also be used to support the expansion of our production facility in Arizona, which is the first specially built electric vehicle manufacturing facility in North America and is already operational for Lucid Air’s pre-production facilities. . ”
Lucid expects to double its US workforce after the investment, from about 2,000 workers today to about 5,000 by the end of 2022.
Lucid will now be supported by a legion of heavy hitters, beyond its already considerable investment in the Saudi Public Investment Fund, which also invests 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 to be the largest SPAC-PIPE related common stock.
PIPE investors have agreed not to sell their shares until September 1 or the shares are registered, whichever comes later. Existing investors will face a six-month lockout of their shares. Churchill’s sponsor agreed not to sell shares for 18 months after the transaction closed.