Lucid Motors finally confirmed the SPAC deal, and the stock is down

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After weeks of rising share prices for a company in Blank Checks, rumored to be targeting the takeover of electric car company Lucid Motors, the two parties formally announced a deal Monday afternoon, and the stock sank sharply.

Lucid, Tesla Inc.
TSLA,
-8.55%

A competitor, to merge with Churchill Capital Corp. IV
CCIV,
+ 8.37%
And the
A special purpose buyout company, or SPAC, also known as a blank check company. SPACs have become hugely popular during the COVID-19 pandemic, and have been used repeatedly in electric vehicles and related sectors amid a massive spike in Tesla’s rating.

Lucid and Churchill announced Monday afternoon that they would pool in a $ 11.75 billion deal, and attracted private investment in the deal of $ 15 a share, meaning a valuation of $ 24 billion. The two parties reported that private investment in the public equity deal, known as PIPE, and cash from Churchill would provide nearly $ 4.4 billion in total financing to Lucid.

Rumors that the deal would take place led Churchill’s shares to rise well above the levels detailed in Monday’s announcement, and shares fell more than 25% in post-close trade. Shares closed Monday at $ 57.37. Like all SPACs, Churchill went public at $ 10 a share, and most of the gains came after reports of discussions between Lucid and Churchill.

Lucid is headquartered in Newark, California, a San Francisco Bay Area city adjacent to the original Tesla Factory in Fremont. CEO Peter Rawlinson, who would continue to lead the company after the deal closed, was the chief engineer of a Model S from Tesla before departing for Lucid.

“Lucid will be announced to accelerate the next phase of our growth as we work to launch the new luxury pure electric sedan, the Lucid Air, in 2021, followed by the premium performance SUV in 2023,” Rollinson said in a statement. “Funding from the deal will also be used to support expansion of our manufacturing facility in Arizona, the first purpose-built electric vehicle manufacturing facility in North America, already in operation for pre-production Lucid Air buildings.

Lucid expects its workforce in the US to more than double after the investment, from around 2,000 workers currently to nearly 5,000 by the end of 2022.

Lucid will now be backed by a legion of big hitters in addition to her already massive investment from the Saudi Arabia Public Investment Fund, which is also investing in PIPE. Other companies 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-related stock. Regular pipe.

PIPE investors have agreed not to sell their shares until September 1 or the shares to be registered, whichever is later. The existing investors will face a six-month closure on their shares. Churchill’s patron agreed not to sell the shares for 18 months after the deal closed.

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