Lidar makers Ouster and Velodyne agree to merge

Lidar makers Ouster and Velodyne agree to merge

The New York Stock Exchange welcomes Ouster Inc. (NYSE: OUST), today, Friday, March 12, 2021, to celebrate its initial listing. To honor the occasion, Ouster CEO Angus Pacala, accompanied by Chris Taylor, Vice President, NYSE Listings and Services, rings The Opening Bell®.

NYSE

Lidar makers Ouster and Velodyne have agreed to merge, combining around $400 million in market value.

The companies said on Monday they would join forces to boost their competitiveness in a market segment that has seen valuations plummet as investors grow increasingly disillusioned with self-driving vehicle technology.

Lidar, short for “light detection and ranging”, is a sensor technology that uses invisible lasers to create a highly detailed 3D map of the sensor’s surroundings. Lidar sensors are considered important components of almost all autonomous vehicle systems currently under development and are increasingly finding applications with advanced driver assistance systems as well as other areas of robotics. .

Intense investor interest in the potential of autonomous vehicles has led many lidar startups to go public over the past few years. But valuations are now a fraction of what they were two years ago, and prominent automakers, including Ford engine and volkswagen reduced investments in autonomy in favor of more limited driver assistance systems.

Under the agreement, signed on Friday, Velodyne shareholders will receive 0.8204 shares of Ouster for each Velodyne share they own, a premium of approximately 7.8% based on the closing prices of Friday for shares of both companies.

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 board after the merger.

“We all knew there was a need for consolidation in the market,” Pacala told CNBC. “We’re the ones who go out and do it.”

Pacala said the combined company will be a tougher 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 flush, critical in a market where it has become difficult for not-yet-profitable startups to raise funds. Between them, Ouster and Velodyne had a total of $355 million in cash as of Sept. 30, Pacala said.

Velodyne was an early pioneer of automotive lidar, developing its first sensor in 2007. Its distinctive “puck” sensors were seen on most early prototype autonomous vehicles. But his early units, which cost $75,000 each and had delicate moving parts, were too expensive and fragile to be used on mass-produced vehicles.

Velodyne was finally able to reduce the cost of its puck sensors to $4,000 while making them more robust. But as new rivals with solid-state lidar sensors — including Ouster, founded in 2015 — have entered the automotive space, the early leader has fallen behind.

Velodyne still holds critical lidar patents and hasn’t been shy about enforcing them. The company sued Ouster for patent infringement earlier this year and filed a related lawsuit with the United States International Trade Commission seeking to block Ouster from importing its lidar units into the United States. (Ouster’s lidar units are manufactured in Thailand by subcontractor Benchmark Electronics.)

The companies will host a joint webcast at 8:30 a.m. ET Monday to discuss the merger. Ouster will release third-quarter results after U.S. markets close on Monday; Velodyne is due to report results after markets close on Tuesday.

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