After months of speculation, one of the most talked about SPAC deals has been confirmed.
The deal will value Lucid Motors at a transaction equity value of $11.75 billion based on the $10 share offering price. Churchill Capital Corp IV is contributing an existing $2.1 billion to the deal.
A PIPE of $2.5 billion is being done by investment groups that include BlackRock, Fidelity, Franklin Templeton and Neuberger Berman. The PIPE investors are paying $15 for shares instead of the usual $10 on SPAC deals.
This marks the largest PIPE investment on a SPAC deal in history. The PIPE also comes with several lock-up provisions that go “well beyond” the closing of the deal. The PIPE values the company at a pro forma equity value of $24 billion.
Why It’s Important: Lucid Motors is launching the Lucid Air luxury electric car in 2021. Some investors believe Lucid could be a future competitor to Tesla Inc (NASDAQ:TSLA). The Lucid Air has an estimated range of 500 miles on a full charge.
The proceeds from the deal will help fund expansion for Lucid Motors to get to its goal of production capacity of 365,000 annual units. The company’s current Arizona factory can produce 34,000 vehicles per year.
The Lucid Air is set to launch in 2021. The company’s Gravity luxury SUV is scheduled to be released in 2023. Additional more affordable electric vehicle options are expected from the company in the future.
Lucid has six existing U.S. sales studios with plans for additional locations.
Price Action: Shares of Churchill Capital Corp IV are down 14% to $49.36 in after-hours trading.
Disclosure: The author is long shares of CCIV.