Lucid Motors to Go Public in Merger with Churchill Capital Corp IV

Posted on 02/23/2021


Luxury EV maker Lucid Motors and Churchill Capital Corp IV (NYSE: CCIV), a special purpose acquisition company, announced that they have entered into a definitive merger agreement. CCIV and Lucid are combining at a transaction equity value of US$ 11.75 billion. The transaction values Lucid at an initial pro-forma equity value of approximately US$ 24 billion at the PIPE offer price of US$ 15.00 per share and will provide Lucid with approximately US$ 4.4 billion in cash (assuming no existing CCIV shares are redeemed for cash at closing). Lucid’s first car, the Lucid Air, is a luxury sedan. According to presentation documents, Lucid Air Pure plans to sell starting at US$ 69,000 (after US$ 7,500 potential federal tax credit.) Lucid has received only a limited number of reservations for the Lucid Air, all of which may be cancelled. Lucid Motors revealed no revenue figures for 2020, only projecting years for 2021 onward.

The company is attempting to position itself as a luxury version of EV, attempting to best Tesla, Inc.

Michael Klein, Chairman and CEO of CCIV, said in a press release, “CCIV believes that Lucid’s superior and proven technology backed by clear demand for a sustainable EV make Lucid a highly attractive investment for Churchill Capital Corp IV shareholders, many of whom have an increased focus on sustainability. We are pleased to partner with Peter and the rest of Lucid’s leadership team as it delivers the highly anticipated Lucid Air to market later this year, promising significant disruption to the EV market and creating thousands of jobs across the U.S.”

Lucid’s growth will continue to benefit the communities in which it operates, particularly in California where the company is headquartered and in Arizona where the company has built its vehicle manufacturing facility from the ground up as well as its in-house EV powertrain manufacturing facility. Lucid’s Advanced Manufacturing Plant (AMP-1) in Casa Grande, Arizona is scheduled to begin production in 2H 2021. Lucid currently employs nearly 2,000 people in the U.S., and intends to continue growing quickly to support the company’s ramp in operations, with 3,000 employees expected to be added domestically by the end of 2022. Peter Rawlinson will continue to lead Lucid along with the rest of the company’s leadership team. Currently, Lucid’s AMP-1 facility can produce 34,000 vehicles annually, but with a total of three phases of expansion planned over the coming years, the site is expected to be capable of producing approximately 365,000 vehicles per year at scale.

As a part of its vision, Lucid intends to leverage its technology portfolio and expertise in electrification to enable a broader societal transformation towards clean energy. Lucid sees compelling potential for use of its electric powertrain technology in other OEM vehicles as well as in the aerospace, heavy machinery and agricultural industries, and also recognizes adjacent opportunities for energy storage applications in the residential, commercial and utility sectors.

Highlights

The total investment of approximately US$ 4.6 billion is being funded by CCIV’s approximately US$ 2.1 billion in cash (assuming no redemptions by CCIV shareholders) and a US$ 2.5 billion fully committed PIPE at $15.00 per share, a 50% premium to CCIV’s net asset value, anchored by Saudi Arabia’s Public Investment Fund (PIF) as well as funds and accounts managed by BlackRock, Fidelity Management & Research LLC, Franklin Templeton, Neuberger Berman, Wellington Management, and Winslow Capital Management, LLC. PIF was an early investor in Lucid and controls the company. Pro forma PIF ownership at up to 62% excludes potential PIF participation in the PIPE.

None of Lucid’s existing investors will sell stock in the transaction and are subject to a six-month lock up for the shares they receive in the transaction. All proceeds will be used as growth capital for the company to execute on its strategic and operational initiatives. Lucid currently has no indebtedness.

The transaction includes a US$ 2.5 billion fully committed, common stock PIPE with a unique investor lock-up provision that runs until the later of (i) September 1, 2021, and (ii) the date the PIPE shares are registered. In connection with the transaction, Churchill’s sponsor has entered into an agreement to amend the terms of its founder equity to align with the long-term value creation and performance of Lucid. Churchill’s sponsor has agreed not to transfer its founder equity for 18 months after the closing of the transaction.

Advisors

Citi is serving as sole financial advisor to Lucid. BofA Securities and Guggenheim Securities are serving as M&A advisors to Churchill, and Guggenheim Securities rendered a fairness opinion to Churchill in connection with the proposed transaction. BofA Securities and Citi are serving as co-placement agents and Guggenheim Securities is serving as capital markets advisor to Churchill on the PIPE. Davis Polk & Wardwell LLP is serving as legal counsel to Lucid. Weil, Gotshal & Manges LLP is serving as legal counsel to Churchill.

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