- Daily Zen
At $24 billion, it's the largest such reverse merger to date
Lucid Motors, the luxury electric vehicle makers, will go public with a blank-check firm Churchill Capital IV Corp in a $24 billion deal, the largest such reverse merger to date.
Church Capital IV is headed by dealmaker Michael Klein, who owns three other special acquisition companies. Saudi Arabia’s sovereign wealth fund has a majority stake in Lucid Motors. The company will combine with Churchill Capital IV, which raised $1.8 billion in July.
Lucid comes with an impressive legacy and is run by industry veterans who have experience in launching electric cars.
As part of the transaction, Lucid will receive the cash raised by Church and PIPE (private investment in public equity) investment of $2.5 billion raised from investors such as Saudi Arabia’s Public Investment Fund, BlackRock, Fidelity, and others. The deal has a total equity value of $11.75 billion.
Initial investor excitement sent shares in the SPAC up almost 500 percent so far this year, but they fell in after-hours trading after the deal details came out on Monday. The publicly traded shares of CCIV fell nearly a third to $40.35, giving the merged company a market capitalization of about $64 billion.
Lucid’s superior and proven technology backed by clear demand for a sustainable EV make Lucid a highly attractive investment for Churchill Capital Corp IV shareholders, many of whom have an increased focus on sustainability.
Michael Klein, Church Capital IV
The Pipe was sold to investors at $15 per share, a 50 percent premium to Spac’s net asset value. The PIF holds up to 85 percent of existing Lucid shares and is expected to retain 62 percent of the shares outstanding after the deal is completed.
The $15-per-share Pipe deal sets the company valuation at $24 billion.
Other electric vehicle makers went through the SPAC route last year. Fisker’s public offering has done well in the market, but Nikola did not fare well.
But Lucid comes with some impressive legacy and is run by industry veterans who have experience in launching electric cars. The company was founded in 2007 and employs about 2,000 people. Lucid unveiled its Model Air in September; this announcement has been one of the most exciting in the Electric Vehicle space. The new car rivals the Tesla S Model in technology and mileage both.
Lucid presented a very impressive score of 517 miles EPA range, better than the 400 miles of the Model S. Peter Rawlinson, its chief executive, and a former Tesla executive, was chief engineer on the Tesla Model S, and will remain in his present position even after the merger.
The company’s Model Air rivals the Tesla S Model in technology and mileage both.
There are many others from Tesla who are now working at Lucid. Other alumni are Eric Bach, Tesla’s former director of engineering; Peter Hochholdinger, a Tesla vice-president of production for three years; and Peter Hasenkamp, who led procurement for the Model S.
Lucid will expand its facilities in Arizona, where it plans to build the cars. The company has promised to deliver 20,000 vehicles by 2022 and 251,000 in 2026 by adding other models like an electric sport utility vehicle.
Klein said, “Lucid’s superior and proven technology backed by clear demand for a sustainable EV make Lucid a highly attractive investment for Churchill Capital Corp IV shareholders, many of whom have an increased focus on sustainability.”
Klein, a former Citigroup dealmaker, has been an adviser to Saudi Arabia’s PIF. It has also backed his earlier deal with MultiPlan, a healthcare company that went public through a merger with Churchill Capital III.
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