(Reuters) – Luxury electric vehicle maker Lucid Motors Inc is nearing a deal to go public in a valuation of about $ 12 billion after veteran negotiator Michael Klein’s blank check acquisition firm launched a financing effort to support the transaction, people familiar with the matter said on Tuesday.
The merger between Lucid and Klein’s Churchill Capital IV Corp would be the largest in a series of deals made by electric vehicle manufacturers such as Nikola Corp and Fisker Inc, which went public by combining special-purpose acquisition companies ( SPACs).
Churchill Capital IV began negotiations with investors to raise more than $ 1 billion from the sale of shares in a public equity investment (PIPE) transaction for the deal with Lucid, the sources said. The size of PIPE could reach $ 1.5 billion or more based on investor demand, one added.
These funds would be in addition to the $ 2 billion that Churchill Capital IV raised in an initial public offering (IPO) in July on the New York Stock Exchange. Lucid and Klein agreed on the main terms of the deal, according to the sources.
If PIPE’s fundraising is successfully completed, a deal could be announced later this month, according to the sources, who requested anonymity to discuss the confidential details. Churchill Capital IV declined to comment. Lucid did not immediately respond to a request for comment.
Churchill Capital IV shares soared with the news and were trading up 30% to $ 52.20.
Lucid, founded in 2007 as Atieva Inc by former Tesla executive Bernard Tse and entrepreneur Sam Weng, makes luxury electric vehicles. It was initially funded by Chinese and Silicon Valley venture capitalists, with additional funding from sponsors such as Chinese state-owned automaker BAIC Motor and Chinese technology company LeEco.
To help finance the construction of a U.S. assembly plant in Casa Grande, Arizona, Lucid was driven by a $ 1 billion investment in 2018 by the Saudi Arabian Public Investment Fund.
Churchill Capital IV’s share price has risen more than 300% since Bloomberg News reported in January that it was in talks to merge with Lucid.
SPACs like Churchill IV are shell companies that raise money on an IPO to merge with a private company that becomes open as a result.
The merger with a SPAC emerged as a popular IPO alternative for companies looking to go public with less regulatory scrutiny and more certainty about the valuation that will be obtained and the funds that will be raised.
Investors interested in SPACs are looking for electric vehicle startups, hoping to catch the next Tesla Inc. While some businesses like Fisker have paid off for SPAC investors, others, like Nikola, have given up on their short-term gains.
Klein raised a series of SPACs that closed deals for companies, including healthcare services company MultiPlan Corp and analytics company Clarivate Plc.
Reporting by Joshua Franklin in Miami and Anirban Sen in Bangalore; Editing by David Gregorio and Nick Zieminski