Lucid SPAC-Lucid SPAC Gives Up Some of Massive Gain After Merger Confirmed

Lucid SPAC Gives Up Some of Massive Gain After Merger Confirmed

(Bloomberg) -- Shares of the blank-check firm combining with electric-vehicle startup Lucid Motors Inc. plunged in early trading after confirming the biggest SPAC merger yet to cash in on investor enthusiasm for battery-powered cars.

Churchill Capital Corp IV, the special-purpose acquisition company run by financier Michael Klein, fell as much as 42% in premarket trading after confirming its merger with Lucid. The deal will generate about $4.4 billion in cash for the 14-year-old carmaker, which announced production of its debut model will be delayed to the second half of this year.

Lucid has shied away from comparisons to market leader Tesla Inc., but the public listing at a pro-forma equity value of $24 billion positions it to compete for a slice of what’s expected to become a rapidly growing market for EVs. It plans to use the newly acquired funds to bring vehicles to market and expand its factory in Casa Grande, Arizona.

Churchill Capital shares surged 472% through Monday’s close since Bloomberg News first reported on Jan. 11 that the firm was in talks with Lucid.

The reverse-merger represents the biggest capital injection for Lucid since Saudi Arabia’s Public Investment Fund invested more than $1 billion in 2018. The agreement included a $2.5 billion private placement in public equity, or PIPE, the largest of its kind on record for a SPAC deal. It was led by PIF as well as BlackRock, Fidelity Management, Franklin Templeton, Neuberger Berman, Wellington Management and Winslow Capital, according to a joint statement from Lucid and Churchill Capital.

The placement sold at $15 a share -- a 50% premium to Churchill’s net asset value -- which translates into about $24 billion in pro-forma equity value, the companies said. The combined company has a transaction equity value of $11.8 billion.