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Ouster and Velodyne announced today that the two LiDAR providers will merge in an all-stock transaction. The agreement was signed on November 4, 2022 and is expected to be completed in the first half of 2023, subject to customary closing conditions including shareholder approval from both companies.
The combined company plans to leverage the complementary customer base, partners and distribution channels to accelerate LiDAR adoption. Combined, Ouster and Velodyne have 173 granted and 504 pending patents, and a cash balance of approximately $355 million as of the end of September 2022.
Ouster and Velodyne predict the combined company will save at least $75 million in operating costs within the first 9 months of the transaction’s close.
Under the terms of the agreement, each Velodyne share will be exchanged for 0.8204 shares of Ouster stock when the deal closes. This will result in Velodyne and Ouster shareholders each owning around 50% of the combined company based on current shares.
Ouster’s current CEO Angus Pacala will lead the combined company as CEO, and Dr. Ted Tewksbury, Velodyne’s current CEO, will serve as Executive Chairman of the Board of the combined company, which will be made up of eight members, four appointed by each company.
“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,” Pacala said. “Together, we will aim to deliver the performance customers demand while achieving price points low enough to promote mass adoption.”
Kyle Vogt, co-founder and CEO of autonomous driving company Cruise, last year said the LiDAR industry would consolidate. The issue, according to Vogt, is the projected revenue comes from “entirely overlapping potential customers, with very little discount applied to future projections.”
“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,” Tewksbury said. “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.”
In September, Ouster announced it was reducing its headcount by approximately 10%, reducing spending across the business by over 15% and suspending sales of common stock through at-the-market. The changes were part of the company’s comprehensive cost-reduction initiative.
The company paired these cuts with moves to accelerate its market share, like product releases and targeted commercial strategies. Recently, Ouster announced the release of its 3D industrial LiDAR sensor suite designed for high-volume material handling applications.
Ibeo Automotive Systems GmbH, a global provider of LiDAR sensors, recently filed for insolvency, and the Hamburg insolvency court has granted insolvency proceedings in self-administration. The company is continuing operations in all divisions in Hamburg, Germany, Eindhoven, Netherlands, and Detroit, Michigan at full capacity.