To increase competitiveness in a struggling market segment, Lidar makers Ouster and Velodyne have agreed to a merger that will combine roughly $400 million in market value.
The deal was signed on Friday and gave Velodyne shareholders 0.8204 shares of Ouster for each Velodyne share they hold. Based on Friday’s closing prices for the two companies’ stocks, a premium of about 7.8%.
Angus Pacala, Ouster’s Founder and CEO, will lead the newly combined company. Velodyne CEO Ted Tweksbury will Chair the company’s Board of Directors.
Pacala told CNBC, “We all knew that there is a need for consolidation in the market. This is us actually going out and doing it.” He said the newly formed company will hold a combined 170 patents and “complementary customer bases, partners, and distribution channels.”
Lidar, which stands for “light detection and ranging,” is a component of nearly all current autonomous-vehicle systems. Interest in the technology has created rapid growth over the last few years. However, valuations have dropped dramatically as investors have become more hesitant of fully autonomous vehicles, and prominent automakers, like Ford and Volkswagen, have abandoned investments in complete autonomy in favor of more limited driver-assist systems.
The two companies had a combined $355 million in cash available as of September 30, and have already identified about $75 million in savings they expect to realize over the first nine months after finalizing the merger.
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