Politics

Investor no-show jeopardizes $24 billion Lucid Motors Spac deal

The $24 billion IPO deal for Lucid Motors struggled to make it to the finish line Thursday after the blank check company that merged with the electric-vehicle start-up failed to gain sufficient support from private investors during a pivotal moment. shareholders meeting.

Churchill Capital IV, the special-purpose acquisition firm led by Wall Street dealmaker Michael Klein, voted Thursday for investors to approve its merger with the California-based luxury electric car maker.

But the deal failed to close because a proposal to set up Lucid as a publicly traded company did not receive sufficient support from investors. That was not necessarily because they are against the deal, but rather because a large proportion of investors did not vote at all.

Of the investors who did vote, 97 percent supported the planned merger of the electronic start of the vehicle with the Spac.

“The company still needs additional votes to get approval for that proposal by a majority of its outstanding shares,” Churchill said. “As a result, the meeting has been adjourned to obtain the required votes.”

Speaking to shareholders, Klein and Peter Rawlinson, CEO of Lucid, begged investors to vote for their shares. “The transaction cannot be closed until proposal two has received these votes,” Klein said.

In recent days, advisors working with Churchill Capital IV and Lucid have scoured online forums such as Reddit and StockTwits to reach out to shareholders in the Spac in an effort to “take the mood out of it.”

In conversations with investors, Klein explained to some of them how to check their spam filters, in case emails detailing the voting process went to that folder.

The delay in closing the deal highlights the pitfalls for Spacs attracting large numbers of private investors. Such investors have poured into the stock market over the past year through online brokerage platforms such as Robinhood.

“Every investor’s vote counts, whether you’re a Robinhood trader or manage your portfolio through a traditional brokerage — please vote, please,” Rawlinson said in Thursday’s call.

Robinhood, which is currently pitching investors for an IPO that could value the company at $35 billion, has been criticized for not providing enough guidance for novice traders.

One person involved in the Lucid deal said, “Robinhood needs to focus on this. It’s not good for their users.”

Robinhood typically doesn’t provide in-app notifications about proxy voting, but a person familiar with the procedures said it had emailed all necessary proxy materials.

Churchill Capital IV became one of the most popular stocks among amateur investors earlier this year as rumors of the Lucid deal pushed the stock price nearly 500 percent before it was announced.

Shares in the Spac fell 2.2 percent to $22.91 on Thursday. In the event that the deal collapses, it is likely that the stock will fall toward its $10 per share listing price.

The biggest beneficiary of the planned deal is Saudi Arabia’s Public Investment Fund, which owns a majority of Lucid’s shares after it was bailed out in 2018 when the automaker was in financial snag.

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