Summary
- US-based electric car company Lucid Motors announced plans to merge with special-purpose acquisition company (SPAC) Churchill Capital IV Corporation to become a publicly listed entity.
- The deal values the car company at USD $24 billion, with a PIPE offer price of US $15.00 per share and a transaction equity value of US $11.75 billion.
- The funding will be used to market its two EV models across North America, Europe and China and for its factory expansion plans in Arizona.
- Churchill Capital IV Corporation’s shares closed at USD 57.37, up by 8.37 per cent as of 22 February following the news.
US-based electric car company Lucid Motors announced plans to merge with special-purpose acquisition company (SPAC) Churchill Capital IV Corporation (NYSE: CCIV) to become a publicly listed entity.
A SPAC is a stock exchange-listed shell company which has no commercial operations, with the primary purpose of acquiring private companies. Such merged entities thus allow private firms to become publicly listed directly instead of floating an initial public offering on the stock market.
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Merger agreement details
The deal values the car company at approximately USD $24 billion. Moreover the private investment in the public equity (PIPE) offer price is at US $15.00 per share. The transaction is estimated to provide Lucid Motors with about US $4.4 billion in cash.
Furthermore, Saudi Arabia’s sovereign fund will be the continuing majority shareholder in the merged entity, with an estimated transaction equity valuation of US $11.75 billion. The deal closure is expected in Q2 this year.
This funding will aid the company with its production of two Lucid Motors EV models, the Lucid Air and SUV Gravity performance along with its new factory expansion in Casa Grande, Arizona. The company plans to make and deliver the Lucid Air model in the North American region in the latter half of 2021. It will be subsequently launched in the EU and China in 2022 and 2023, respectively. Its luxury SUV Gravity performance is expected to be launched in 2023 in North America.
The factory is expected to produce up to 365,000 units per year following three phases of expansion in the upcoming years.
Rising competition
The car company has been compared to electric vehicle giant Tesla (NASDAQ: TSLA), being in the EV luxury sedan space and its CEO and CTO Peter Rawlinson being a former Tesla chief engineer.
However, the company aims to position itself as a luxury brand which competes against established luxury car brands such as Audi, BMW (ETR: BMW) and Daimler-owned (ETR: DAI) Mercedes-Benz.
Want to know more? Do watch: Tesla becomes world's most valuable car maker | UK Market Update
This is also the most recent and high-valued deal with Churchill Capital IV following its SPAC facilitated public listing of EV companies Nikola (NASDAQ: NKLA) and Fisker (NYSE: FSR) in 2020.
The move comes amid a recent flurry of investment activity towards developing self-driving and electric vehicles in the automotive sector, following the boost in Tesla stock prices in the last year.
Want to know more? Do read: How Jaguar Is Planning to Overhaul Its Business and Go Electric
Stock prices
Churchill Capital IV Corporation’s (NYSE: CCIV) shares closed at USD 57.37, up by 8.37 per cent as of 22 February following the news. However the company’s shares fell by 30.28 per cent to USD 40.00 in after-hours trading.
