Investor no-show puts $24bn Lucid Motors Spac deal in jeopardy

The $24bn deal for Lucid Motors to go public was struggling to cross the finish line on Thursday, after the blank-cheque company merging with the electric vehicle start-up failed to put together enough support from retail investors at a crucial shareholder meeting.

Churchill Capital IV, the special purpose acquisition company led by Wall Street dealmaker Michael Klein, held a vote on Thursday for investors to rubber-stamp its merger with the California-based luxury electric carmaker.

But the deal was unable to close because one proposal on Lucid’s incorporation as a public company gained insufficient backing from investors. That was not necessarily because they are against the deal, but rather because a large chunk of investors did not vote at all.

Of those investors that did vote, 97 per cent backed the planned merger of the electronic vehicle start-up with the Spac.

“The company still needs additional votes to obtain 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.”

In a call with shareholders, Klein and Peter Rawlinson, Lucid chief executive, implored investors to vote their shares. “The transaction cannot close until proposal two receives these votes,” Klein said.

In the past several days, advisers working with Churchill Capital IV and Lucid have blitzed online forums such as Reddit and StockTwits to reach shareholders in the Spac in an effort to “get out the vote”.

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

The delay in closing the deal underscores the pitfalls for Spacs that attract large numbers of retail investors. Such investors have flooded into the stock market in the past year through online brokerage platforms such as Robinhood. 

“Every single investor vote counts, whether you are a Robinhood trader or managing your portfolio via a traditional brokerage — please, please vote,” Rawlinson said in the call on Thursday.

Robinhood, which is currently pitching investors on an initial public offering that could value the company at $35bn, has faced criticism that it does not provide enough guidance to novice traders. 

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

Robinhood does not typically issue in-app notifications about proxy votes, but a person familiar with its procedures said it had sent out all necessary proxy materials by email.

Churchill Capital IV became one of the most popular stocks among amateur investors earlier this year as rumours about the deal with Lucid sent its stock price up almost 500 per cent before it was announced. 

Shares in the Spac fell 2.2 per cent on Thursday to $22.91. In the event the deal collapses, it is likely the stock would fall towards its listing price of $10 per share.

The biggest beneficiary from the planned deal is Saudi Arabia’s Public Investment Fund, which owns a majority of Lucid’s stock after rescuing it in 2018 when the carmaker faced financial difficulties.