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

Updates on Special Purpose Acquisition Companies

Subscribe to myFT Daily Digest to be the first to know about the latest news from specialist acquisition companies.

The $ 24 billion deal for Lucid Motors to go public struggled to cross the finish line after the blank check company merging with the electric vehicle start-up failed to pull together sufficient support from retail investors at a crucial shareholder meeting.

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

But the deal could not be reached because a proposal to incorporate Lucid as a public company failed to gain sufficient support from investors. The shortfall was not necessarily the result of investor opposition to the deal, but rather that a large number of investors did not vote at all.

Of the investors who voted, 97 percent supported the e-vehicle startup’s plan to merge with Spac.

“The company still needs additional votes to secure approval of this proposal by the majority of its outstanding shares,” Churchill said. “Accordingly, the meeting was adjourned to obtain the required votes.”

In a call to shareholders, Klein and Peter Rawlinson, CEO of Lucid, pleaded with investors to vote for their shares. “The transaction cannot be closed until proposal two receives these votes,” Klein said.

Over the past few days, advisers working with Churchill Capital IV and Lucid have bombarded online forums such as Reddit and StockTwits to reach Spac shareholders in an attempt to “get the vote out.”

In calls with investors, Klein explained to investors how to check their spam filters in case emails detailing the voting process were so classified.

The delay in closing the deal highlighted the pitfalls for Spacs that are attracting a large number of retail investors. Amateur investors have been flooding the stock market over the past year through online brokerage platforms such as Robinhood.

“Every vote of an investor counts, whether you are a Robinhood trader or manage your portfolio through a traditional brokerage house – please, please, vote,” Rawlinson said at the call Thursday.

Robinhood, which is currently offering investors an initial public offering that could value the company at $ 35 billion, has been criticized for not providing enough advice to novice traders.

One person involved in the Lucid deal said, “Robinhood needs to focus on this. It is not fair to their users.

Robinhood does not typically issue in-app notifications regarding proxy votes, but someone familiar with its procedures said they emailed all the necessary proxy documents.

Churchill Capital IV has become one of the most popular stocks among amateur investors this year, as rumors of the Lucid deal have pushed its share price up nearly 500%.

Spac shares fell 2.2% Thursday to $ 22.91. If the deal fails, it is likely to drop to its listing price of $ 10 per share.

The biggest beneficiary of the planned deal is the Saudi Arabia Public Investment Fund, which owns the majority of Lucid’s shares after rescuing it in 2018 when the automaker ran into financial difficulties.