The New York Stock Exchange welcomes Ouster Inc. (NYSE: OUST) today, Friday, March 12, 2021, in celebration of its Initial Listing. To honor the occasion, Ouster CEO Angus Pacala, along with Chris Taylor, Vice President of NYSE Listings and Services, ring the opening bell.
lidar manufacturers Easter Y Velodyne have agreed to merge, combining approximately $400 million in market value.
The companies said Monday they will join forces to boost their competitiveness in a market segment that has seen valuations slide as investors have become disillusioned with autonomous vehicle technology.
Lidar, short for “light detection and ranging,” is a sensor technology that uses invisible lasers to create a highly detailed three-dimensional map of the sensor’s surroundings. Lidar sensors are considered important components of almost all autonomous vehicle systems currently in development and are increasingly finding applications with advanced driver assistance systems, as well as in other areas of robotics.
Intense investor interest in the potential of autonomous vehicles has led to many new lidar companies going public in recent years. But the valuations are now a fraction of what they were two years ago, and leading automakers, including ford engine Y Volkswagen have cut investments in autonomy in favor of more limited driver assistance systems.
Under the deal, signed Friday, Velodyne shareholders will receive 0.8204 Ouster shares for each Velodyne share they own, a premium of about 7.8% based on Friday’s closing prices for the two companies’ shares. .
Ouster founder and CEO Angus Pacala will lead the combined company, which does not yet have an official name. Velodyne CEO Ted Tewksbury, who joined the lidar maker last year, will chair the company’s post-merger board of directors.
“We all knew that there is a need for consolidation in the market,” Pacala told CNBC. “This is us going out and doing it.”
Pacala said the combined company will be a more formidable competitor, with streamlined manufacturing, more than 170 patents and what he described as “complementary customer bases, partners and distribution channels.”
The companies have identified about $75 million in savings that can be realized in the first nine months after the transaction closes, he said.
The combined company will also be relatively fluid, critical in a market where it has become difficult for startups that are not yet profitable to raise cash. Between them, Ouster and Velodyne had a combined $355 million in cash as of Sept. 30, Pacala said.
Velodyne was an early pioneer in automotive lidar, developing its first sensor in 2007. Its distinctive “disc” sensors were seen in most early autonomous vehicle prototypes. But the first units of it, which cost $75,000 each and had delicate moving parts, were too expensive and fragile for use in mass-produced vehicles.
Velodyne was finally able to bring the cost of its disk sensors down to $4,000 while making them more robust. But as new rivals with solid-state lidar sensors, including Ouster, founded in 2015, entered the automotive space, the early leader was left behind.
Velodyne still holds critical lidar patents and has not hesitated to enforce them. The company sued Ouster for patent infringement earlier this year and filed a related action with the US International Trade Commission to prevent Ouster from importing its lidar units into the United States. (Ouster’s lidar units are made in Thailand by contract manufacturer Benchmark Electronics.)
The companies will host a joint webcast at 8:30 am ET on Monday to discuss the merger. Ouster will report its third-quarter results after the US markets close on Monday; Velodyne is scheduled to report its results after the markets close on Tuesday.