Lucid Motors and blank check company Churchill Capital IV (CCIV) confirmed a merger deal to take the California-based EV company public. Shares of Churchill Capital were down around 25% at 10:45 a.m. ET, though coming off their session lows.
The transaction, announced on Monday evening, values Lucid at an initial pro-forma equity value of approximately $24 billion at the PIPE (private investment in public equity) offer price of $15.00 per share. It will provide the electric vehicle company with approximately $4.4 billion in cash.
The deal has a transaction equity value of $11.75 billion which includes a cash contribution from CCIV of $2.1 billion, and a PIPE investment of $2.5 billion with a lock-up provision that “binds holders well beyond closing.”
Speculation over an agreement had been circulating for more than a month prompting previous spikes in CCIV stock. In mid-February shares of Churchill Capital IV, led by investment banker Michael Klein, surged 30% following a report of a nearing agreement. On Monday the stock had gained double digit percentages after a Bloomberg report said an agreement announcement could come by Tuesday.
The electric vehicle maker is backed by Saudi Arabia’s sovereign wealth fund. A deal with Churchill Capital IV is one of highest profile EV SPAC agreements since Nikola (NKLA) and Fisker (FSR) debuted publicly last year.
Lucid Motors has been closely watched since it is competing in the electric luxury sedan space. The company’s CEO and CTO Peter Rawlinson was the chief engineer at Tesla (TSLA) for the model S prior to joining Lucid Motors in 2013.
Lucid Motors placed its first US production factory in Casa Grande, Arizona. The company aims to meet production goals for of its most expensive vehicle, the Air Dream Edition this year.
“I think it’s really important that we start at a high-end position as a true luxury brand. I’m a great believer that the first product defines the brand in way Tesla model S defined Tesla as a brand,” Rawlinson told Yahoo Finance in October of last year.
In an email to Yahoo Finance on Monday prior to a deal announcement, Lucid’s official statement read “Lucid Motors has always been clear about its intent to go public at some point in order to accelerate the adoption and global availability of Lucid’s exclusive electric vehicle and sustainability technologies…Currently, our focus continues to be on bringing Lucid Air to production in Spring of this year, with the strong support of key investors and our partners at the Public Investment Fund.”
Lucid also confirmed it will be opening a showroom in New York City’s trendy meat packing district, just blocks away from Tesla’s showroom.
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre
Here’s why Tesla’s stock tumbled after Battery Day, and why analysts are still bullish
Nikola calls short-seller report a ‘hit job,’ shares still fall
Tesla analyst is bullish on what the company is doing with its high-priced stock, raises price target to $550
Apple analyst says record-breaking share price rally is about ‘MOMO’ not ‘FOMO’
Tesla shares surge 12% on day of stock split