The absence of investors puts the $24 billion Lucid Motors Spac deal at risk
On Thursday, Lucid Motors’ $24 billion listing was struggling to cross the finish line after the merger of the blank check company and the electric car startup failed to obtain sufficient support from retail investors at a key shareholder meeting.
Churchill Capital IV, a special-purpose acquisition company led by Wall Street deal maker Michael Klein, held a vote on Thursday to require investors to provide rubber stamps for its merger with the California-based luxury electric car manufacturer .
However, the transaction could not be completed because a proposal to register Lucid as a listed company did not receive sufficient support from investors. This is not necessarily because they oppose the deal, but because a large number of investors did not vote at all.
Among those investors who did vote, 97% Support planned consolidation Use Spac to start an electric car.
Churchill said: “The company still needs additional votes to obtain approval for the majority of issued shares.” “As a result, the meeting has been adjourned to obtain the required number of votes.”
In a conference call with shareholders, Klein and Lucid CEO Peter Rowlinson urged investors to vote on their shares. “Until Proposal 2 receives these votes, the transaction cannot be closed,” Klein said.
In the past few days, consultants working with Churchill Capital IV and Lucid have taken a hit on online forums such as Reddit and StockTwits to contact Spac’s shareholders to “get voting rights.”
In a phone call with investors, Klein explained to some of them how to check their spam filters in case emails detailing the voting process enter the folder.
Delay in completing the transaction Highlights the pitfalls of Spacs Attracted a large number of retail investors. In the past year, such investors poured into the stock market through online brokerage platforms such as Robinhood.
“Whether you are a Robinhood trader or manage your portfolio through a traditional brokerage firm, every investor’s vote is important-please vote,” Rawlinson said on a conference call on Thursday.
Robinhood is currently introducing investors to an initial public offering that may value the company at $35 billion, but has been criticized for not providing sufficient guidance for novice traders.
A person involved in the Lucid transaction said: “Robinhood needs to pay attention to this. This is not suitable for their users.”
Robinhood usually does not post in-app notifications about proxy voting, but people familiar with its procedures stated that it has sent all necessary proxy materials via email.
Earlier this year, Churchill Capital IV became one of the most popular stocks among amateur investors, as rumors about trading with Lucid caused its stock price to rise by nearly 500% before the announcement.
Spac shares fell 2.2% on Thursday to $22.91. If the transaction fails, the stock is likely to fall to the listed price of $10 per share.
The biggest beneficiary of the planned transaction is Saudi Arabia’s public investment fund, which rescued most of Lucid’s stock in 2018 when the automaker faced financial difficulties.