Churchill Capital Corp IV (NYSE: CCIV) stock surged 214% over the past month as rumours on Wallstreet speculated the potential merger with Lucid Motors. On Monday afternoon CCIV officially announced its intentions to take Lucid Motors public in a reverse merger. Lucid Motors has made a name for itself on Wallstreet announcing its ambitions to take on EV Goliath, Tesla. In addition, Lucid Motors CEO Peter Rawlinson had spent time as an engineering executive at Tesla prior to launching Lucid Motors. This article will breakdown everything you need to know about the CCIV and Lucid Motor merger.
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Key details surrounding CCIV and Lucid Motors merger
- CCIV and Lucid are combining at a transaction equity value of $11.75 billion.
- The merger is expected to raise $4.6 billion for Lucid Motors with is $2.1 billion being funded in cash and $2.5 billion from fully committed PIPE investors. The total net cash proceeds Lucid will receive is estimated at $4.4 billion according to the company.
- Lucid plan to use the capital raised to proceeds will fund the execution of its strategic and operational initiatives. This also includes the expansion of Lucid’s manufacturing facility in Arizona.
- The merger is expected to be finalised in Q2 2021. The majority shareholder of Lucid has entered into a Voting and Support Agreement to vote in favor of the transaction. This vote would be sufficient to approve the transaction for Lucid shareholders according to a statement.
Lucid is going public to accelerate into the next phase of our growth as we work towards the launch of our new pure-electric luxury sedan, Lucid Air, in 2021 followed by our Gravity performance luxury SUV in 2023. Financing from the transaction will also be used to support expansion of our manufacturing facility in Arizona, which is the first greenfield purpose-built EV manufacturing facility in North America, and is already operational for pre-production builds of the Lucid Air. Scheduled to expand over three phases in the coming years, our Arizona facility is designed to be capable of producing approximately 365,000 units per year at scale.Peter Rawlinson, CEO and CTO of Lucid, said in the official merger announcement, PRNewswire
Why the rumoured Lucid Motors merger is a big deal
Firstly, it is clear to see why this merger is making so much noise on Wallstreet. Investors are very excited at the prospect of the potential merger and the dividends it could pay if delivered. The big selling point is that Lucid are in the process of preparing deliveries. The EV model “Air” is set to begin deliveries in early 2021. The EV model boasts horse power up to 1080hp and can reach 0-60 mp/h in 2.5 seconds. It is clear Lucid Motors are challenging Tesla in the luxury EV department, similar to the Tesla S models. Lucid Motors also see potential for the use of its powertrain technology in the aerospace, heavy machinery and agricultural industries.
The SPAC merger will provide Lucid Motors with the much needed capital to expand on manufacturing and development. Unlike many other SPAC mergers, Lucid Motors can provide investors the peace of mind that deliveries are on the horizon in 2021. This translates to revenue, of which dictates the longevity of emerging EV innovators. In addition, with deliveries around the corner the company can then begin to focus on vehicle sales margins and delivery growth. The vehicles will be manufactured in their $700 million facility. The vehicle production capacity will initially be 34,000 units. According to CNBC, “Rawlinson believes the capacity to grow to 400,000 units by the end of the decade.” Rawlinson also added he plans to have 1 million vehicles produced by 2027.
Before I begin, I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.
In conclusion, the merger between Lucid and CCIV is now underway. Assuming all requirements can be met in a timely fashion, we should see Lucid trading publicly in Q2 2021. This is an exciting prospect for EV investors as this has been one of the most talked about companies in 2021. However, CCIV is currently down 34% pre-market which is a genuine display of the speculation within the realm of SPAC trading. We will continue to cover any updates on the merger was we close in on the second quarter of 2021.
Written by Tyger Fitzpatrick
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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