Lucid Motors and blank check company Churchill Capital IV announced a merger to take the California-based electric vehicle company public.
A blank check company is defined as a development stage company with no specific business plan or purpose, or one that’s said its business plan is to engage in M&A with an unidentified company.
The deal values Lucid at an initial pro-forma equity value of approximately $24 billion. Valuation is 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. This figure includes a cash contribution from CCIV of $2.1 billion. It also includes a PIPE investment of $2.5 billion with a lock-up provision that binds holders well beyond closing.
Deal in the Works for a While
Rumors of a deal had been circulating for more than a month causing spikes in CCIV stock. Churchill Capital IV, led by investment banker Michael Klein, rocketed 30% after a report of an impending agreement. The stock gained double digit percentages after a Bloomberg report recently said an agreement announcement could come within a day.
The electric vehicle maker is backed by Saudi Arabia’s sovereign wealth fund. A deal with Churchill Capital IV is one of highest profile electric vehicle SPAC agreements since Nikola and Fisker debuted publicly in 2020.
Lucid Motors has been closely monitored since it’s competing in the electric luxury sedan space. The company’s CEO and CTO Peter Rawlinson was the chief engineer at Tesla for the Model S. He moved to Lucid Motors in 2013.
Custom Electric Vehicle Manufacturing Facility
Lucid Motors located its first US production factory at a 500-acre property in Casa Grande, Arizona. This location is just south of the Phoenix metro area. The company chose the spot because it’s located between Phoenix and Tucson and is within easy reach of its Silicon Valley headquarters. Casa Grande offered close proximity to critical utilities and an established transportation system. There is also strong support from state and local governments, the company explained. The Arizona facility is the first greenfield — or purpose-built — electric vehicle factory in North America.
The company is looking to meet production goals for of its most expensive vehicle, the Lucid Air.
The company also announced the opening of a second location in South Florida, a Lucid Studio in West Palm Beach. It’s the sixth in a network of Lucid Studios that the company expects will grow to 20 locations by the end of 2021. These “studios” offer customers “a chance to experience Lucid’s advanced electric vehicle technology firsthand, learn about the full line-up of luxury, high-performance EVs, and reserve a Lucid Air.”
The other Studio locations will include New York City, Boston, the D.C. Metro, and Chicago, with possible international expansion.
Lucid Air to Compete with Tesla Model S
“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 2020.
In an email to Yahoo Finance last week before the 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 announced that the company would be opening a showroom in New York City’s trendy meat packing district. The district is a few blocks away from Tesla’s showroom.