High-resolution digital lidar provider Ouster and lidar sensors and solutions company Velodyne have entered into a definitive agreement to merge in an all-stock transaction.
The proposed merger is expected to drive significant value creation and result in a strong financial position through robust product offerings, increased operational efficiencies and a complementary customer base in fast-growing end markets.
The new company will offer a wide range of products to serve a diverse set of end markets and customers, in addition to executing a product roadmap to cater to future market needs. It will use a combined engineering team, the new product roadmap and a customer success team to provide support to customers to deliver affordable, high-performing sensors.
Plans are to be put in place to streamline operating expenditures to build an overall cost structure in line with the projected revenue growth of the combined company. As of September 30, 2022, both Ouster and Velodyne had a combined cash balance of approximately US$355m. Within nine months of closing the proposed merger, the duo seeks to achieve an annualized cost saving of at least US$75m. With a larger global commercial footprint and distribution network, the company aims to deliver increased volumes and reduced product costs while driving sustainable growth.
The newly created company will be headed up by Angus Pacala, Ouster’s CEO, in the position of chief executive officer and Dr Ted Tewksbury, Velodyne’s CEO, as executive chairman of the board. The merger agreement was signed on November 4, 2022, and under the terms of the agreement each Velodyne share will be exchanged for 0.8204 shares of Ouster at closing. Following the transaction, existing Velodyne and Ouster shareholders will end up owning an estimated 50% of the combined company, based on current shares outstanding.
The merger transactions are subject to customary closing conditions including shareholder approval; until the close of the merger transactions, both Ouster and Velodyne will continue to operate their businesses independently. Merger transactions are estimated to be completed in the first half of 2023.
“Ouster’s cutting-edge digital lidar technology, evidenced by strong unit economics and the performance gains of our new products, complemented by Velodyne’s decades of innovation, high-performance hardware and software solutions, and established global customer footprint, positions the combined company to accelerate the adoption of lidar technology across fast-growing markets with a diverse set of customer needs,” said Pacala. “Together, we will aim to deliver the performance customers demand while achieving price points low enough to promote mass adoption.”
“Lidar is a valuable enabling technology for autonomy, with the ability to dramatically improve the efficiency, productivity, safety, and sustainability of a world in motion. We aim to create a vibrant and healthy lidar industry by offering both affordable, high-performance sensors to drive mass adoption across a wide variety of customer applications, and by creating scale to drive profitable and sustainable revenue growth,” commented Tewksbury. “The combination of Ouster and Velodyne is expected to unlock enormous synergies, creating a company with the scale and resources to deliver stronger solutions for customers and society, while accelerating time to profitability and enhancing value for shareholders.”