By Sam Boughedda
Ouster Inc (NYSE:OUST) and Velodyne Lidar Inc (NASDAQ:VLDR) announced Monday that they have entered into a definitive agreement to merge in an all-stock transaction.
Ouster, a provider of high-resolution digital lidar, and Velodyne, a lidar sensors and solutions company, said the merger will drive “significant value creation and result in a strong financial position.”
The deal will see each Velodyne share exchanged for 0.8204 shares of Ouster, resulting in existing Velodyne and Ouster shareholders, each owning approximately 50% of the combined company, based on current shares outstanding.
The combined company will be led by Angus Pacala, who will serve as Chief Executive Officer, and Dr. Ted Tewksbury, who will serve as Executive Chairman of the Board.
The deal is expected to be completed in the first half of 2023.
Following the announcement of the merger, Rosenblatt Securities analysts told investors in a note that they applaud the merger. “The combined company could have over $150mn annual revenue across over 1,000 customers in 2023. We see Ouster’s LiDAR design as more cost competitive, while Velodyne brings software advancements. With Velodyne having shipped over 73K LiDAR sensors and Ouster over 16K, the combined company’s manufacturing cost can be the lowest in the industry,” wrote the analysts.
Meanwhile, Needham & Company analysts said consolidation in the lidar market is forthcoming. “We believe the goal of the combined company is to drive volume and scale, reduce unit/product cost, drive manufacturing efficiencies and better compete with the other sensor modalities (camera/radar). The promise of the LiDAR has underwhelmed the market given the inherent costs and lack of broader adoption of LiDAR in the auto market. We believe the combined companies will help reduce costs and drive adoption,” they said.
Chardan Research analysts stated that “at first blush, we view the combination favorably as key clients and relationships appear complimentary, with few redundancies, offering the opportunity for both cost and revenue synergies.”
“In our view, the merger results in an entity that is more competitive in the market and provides OUST with a cost-effective influx of capital,” they added.