The $ 24 billion deal for Lucid Motors to go public was struggling to cross the finish line Thursday, after the blanket control company that merged with the electric vehicle start-up failed to meet enough support from retail investors at a crucial shareholders ’meeting.
Churchill Capital IV, the special-purpose acquisition company led by Wall Street vendor Michael Klein, held a vote Thursday for investors to seal its merger with the luxury electric manufacturer in California.
But the deal was not able to close because a proposal on the incorporation of Lucid as a public company gained insufficient support from investors. That wasn’t necessarily because they are against the deal, but rather because a large portion of investors didn’t vote at all.
Of those investors who voted, 97 percent supported the planned merger of the electronic vehicle start-up with the Spac.
“The company still needs additional votes to get approval for this proposal from the majority of its outstanding shares,” Churchill said. “As a result, the meeting was postponed to obtain the required votes.”
In a call with shareholders, Klein and Peter Rawlinson, lucid chief executive, have urged investors to vote on their shares. “The transaction cannot be closed until the second proposal receives these votes,” Klein said.
In recent days, advisors working with Churchill Capital IV and Lucid have flashed online forums such as Reddit and StockTwits to reach out to Spac shareholders in an effort to “get the vote”.
In calls with investors, Klein explained to some of them how to check their spam filters, in case e-mails giving the voting process go in that folder.
The delay in closing the deal underlines and traps for Spacs which attracts a large number of retail investors. Such investors have flooded the stock market in the last year through online brokerage platforms like Robinhood.
“Every single investor vote counts, whether you’re a Robinhood trader or manage your portfolio through traditional brokerage – please, please vote,” Rawlinson said in the call Thursday.
Robinhood, which is currently launching investors on an initial public offering that could value the company at $ 35 billion, has been criticized for not providing enough guidance for novice traders.
One person involved in the deal Lucid said: “Robinhood needs to look at this. It’s not fair to its users.”
Robinhood does not typically issue in-app notifications on proxy votes, but one person familiar with its procedures said it had sent all necessary proxy materials by email.
Churchill Capital IV became one of the most popular stocks among amateur investors earlier this year, as rumors about the deal with Lucid sent its stock price nearly 500 percent earlier. ‘he has been announced.
Shares in the Spac fell 2.2 percent Thursday to $ 22.91. In case the deal collapses, it is likely that the stock will fall towards its list price of $ 10 per share.
The biggest beneficiary of the planned deal is Saudi Arabia’s Public Investment Fund, which holds the majority of Lucid’s shares after its bailout in 2018 when the car ran into financial difficulties.