PIF-backed Lucid Motors to go public at $24bn valuation

Tesla's rival electric vehicle manufacturer is going public through a $11.8bn merger with special purpose acquisition company Churchill Capital Corp IV

The Lucid Motors Inc. Alpha Speed Car is unveiled after completing a 217mph test in Ohio ahead of the 2017 New York International Auto Show (NYIAS) in New York, U.S., on Thursday, April 13, 2017. The New York International Auto Show, North America's first and largest-attended auto show dating back to 1900, showcases an incredible collection of cutting-edge design and extraordinary innovation. Photographer: Mark Kauzlarich/Bloomberg

Lucid Motors is merging with Churchill Capital Corp IV, a blank-check company that values the combined entity at a pro-forma equity value of $24 billion, the biggest deal involving a special purpose acquisition firm.

Lucid, which is backed by Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), will get $4.4bn in cash from the deal that will help it expand its manufacturing facility in Arizona and increase its retail and service reach across the US throughout 2021, the company said in a statement late Monday.

"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," Peter Rawlinson, the car maker's chief executive, said.

"This transaction further enables the realisation of our vision to supply Lucid’s advanced EV technologies to third parties such as other automotive manufacturers as well as offer energy storage solutions in the residential, commercial and utility segments," Mr Rawlinson, who was chief engineer on Tesla’s flagship Model S, added.

The agreement includes a $2.5bn private placement in public equity (at $15 a share, or a 50 per cent premium to Churchill’s net asset value). The transaction was led by PIF, BlackRock, Fidelity Management, Franklin Templeton, Neuberger Berman, Wellington Management and Winslow Capital. PIF invested more than $1bn in 2018 in Lucid.

The combined company has a transaction equity value of $11.8bn. Churchill's board and Lucid's special transaction committee have unanimously approved the proposed deal, which is expected to close in the second quarter of 2021.

The deal is subject to approval by Churchill stockholders representing a majority of the outstanding Churchill voting power. 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.

California-based Lucid was founded in 2007 under the name Atieva and was initially focused on building electric-vehicle (EV) batteries. In 2016, it rebranded as Lucid Motors, moved away from being a supplier and pivoted towards making a luxury sedan to rival Tesla, known as the Lucid Air.

The sedan has four price points starting at $69,900 and goes up to $161,500. The Air has an estimated range of over 517 miles (832km) and can go from zero-to-60 mph in under 2.5 seconds, based on US Environmental Protection Agency estimates, according to the company. That compares with Tesla's S model, which has a range of 412 miles, Jaguar's i-Pace model's 234 miles and Porsche Taycan's 227 miles.

Lucid will produce the Air at its new factory in Casa Grande, Arizona. Output will accelerate in the second half of 2021 as the factory increases production. The company's manufacturing facility in Arizona is the first greenfield purpose-built EV manufacturing facility in North America and capable of producing approximately 365,000 units per year. Lucid plans to expand it over three phases.

The company estimates it will have 0.6 per cent of the global EV market share in 2022, rising to 0.7 per cent the following year, according to its latest investors presentation. Lucid forecasts 20,000 vehicle deliveries in 2022 generating $2.2bn in sales, with revenue rising to $5.5bn and $9.9bn in 2023 and 2024, respectively.

The company foresees positive earnings before interest, taxes, depreciation and amortisation of $592 million in 2024, rising to $1.67bn in 2025 and $2.8bn in 2026.

Citi is the sole financial adviser to Lucid. BofA Securities and Guggenheim Securities are serving as M&A advisers to Churchill. BofA Securities and Citi are serving as co-placement agents and Guggenheim Securities is capital markets adviser to Churchill on the PIPE. Davis Polk & Wardwell is legal counsel to Lucid. Weil, Gotshal & Manges will act as legal counsel to Churchill.

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