Today, Friday, March 12, 2021, the New York Stock Exchange welcomes Ouster Inc. (NYSE: OUST) to celebrate its initial listing. To mark the occasion, Ouster CEO Angus Pacala will ring The Opening Bell® with Chris Taylor, Vice President, NYSE Listings and Services.
NYSE
Lidar makers Ouster and Velodyne have agreed on a merger that has a combined market value of around $400 million.
The companies said on Monday they will join forces to boost their competitiveness in a market segment where valuations have fallen as investors 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 3D map of the sensor’s surroundings. Lidar sensors are considered important components of almost all autonomous vehicle systems currently under development and are finding increasing application in advanced driver assistance systems as well as in other areas of robotics.
Strong investor interest in the potential of self-driving vehicles has prompted many lidar startups to go public in recent years. But valuations are now a fraction of what they were two years ago, and prominent automakers like Ford Motor and Volkswagen have trimmed their investments in autonomy in favor of more limited driver-assistance systems.
Under the terms of the agreement, signed Friday, Velodyne shareholders will receive 0.8204 shares of Ouster for each Velodyne share they hold — a premium of approximately 7.8% based on Friday’s closing prices of the two companies’ shares.
Ouster founder and CEO Angus Pacala will lead the combined company, which does not yet have an official name. Ted Tewksbury, CEO of Velodyne, who joined the lidar maker last year, will chair the post-merger company’s board of directors.
“We all knew the market needed consolidation,” Pacala told CNBC. “That’s us actually going out and doing it.”
Pacala said the combined company will be a more formidable competitor with streamlined manufacturing, over 170 patents and what he described as “complementary customer bases, partners and distribution channels.”
The companies have identified approximately $75 million in savings to be realized in the first nine months following the closing of the transaction, he said.
The combined company will also be relatively cohesive and crucial in a market where it’s become difficult for startups that aren’t yet profitable to raise money. Together, Ouster and Velodyne had a combined cash balance of $355 million as of Sept. 30, Pacala said.
Velodyne was an early pioneer in automotive lidar, developing its first sensor in 2007. Its distinctive “puck” sensors were seen on most early autonomous vehicle prototypes. But its early units, which cost $75,000 each and had delicate moving parts, were too expensive and fragile for use in production vehicles.
Velodyne was eventually able to bring the cost of its puck sensors down to $4,000 while making them more robust. But as newer competitors with solid-state lidar sensors — including Ouster, founded in 2015 — entered the automotive space, the early leader fell behind.
Velodyne still holds important lidar patents and hasn’t hesitated to enforce them. The company sued Ouster for patent infringement earlier this year and filed a related lawsuit with the US International Trade Commission to prevent Ouster from importing its lidar units into the United States. (Ouster’s lidar units are manufactured in Thailand by contract manufacturer Benchmark Electronics.)
The companies will host a joint webcast on Monday at 8:30 am ET to discuss the merger. Ouster to report third quarter results after US markets closed on Monday; Velodyne is scheduled to report its results after the market close on Tuesday.