Oster and Velodyne, two lidar firms, have agreed to merge in an all-stock transaction, the businesses said Monday. According to the agreement signed on November 4, Oster and Velodyne will both hold a 50% stake within the new firm.
The number of businesses involved in the merger including Autonomous Automobile Technology Company Cruise CEO Kyle VogtoWere anticipating another round of consolidation in the lidar house. This is partly because there are too many lidar firms to account for how many OEMs are implementing the sensor for autonomous driving purposes. This is also because several firms, including Auster and Velodyne, went public through special purpose acquisitions (SPACs) at inflated valuations that were based primarily on projected earnings, not exact earnings.
Earlier this year Velodyne acquired AI and lidar company Bluecity.ai, and last year Oster acquired lidar startup Sense Photonics. AV firm Aurora bought Blackmore in 2019, and Cruise acquired Strobe in 2017.
Both Velodyne and Auster have been battling plunging stock prices over the past year, and neither have been able to generate any earnings so far. The firms closed the second quarter with web shortfalls of $44.3 million and $28 million, respectively. Loss-generating firms can generally keep investor dharma in the event that they will not grow earnings less than normal, which Auster has eliminated from year to year. But Velodyne’s income hasn’t grown at all from the year before; It fell marginally by 41%.
According to Velodyne CEO Ted Texbury, from the merger, businesses are expected to combine forces and create scale “to drive profitable and sustainable revenue growth.”
The firms say the merger will help them realize annual value financial savings of at least $75 million within 9 months after the transaction closes, in addition to $335 million in compounded funds for the third quarter.
The merger could also be a lifeline for Velodyne, a company struggling with a series of internal dramas, including the resignation of its CEO Anand Gopalan in July last year. (Tewsbury took over for him in November.) Velodyne never explained why Gopalan resigned, although Velodyne was waived $8 million in fairness compensation, according to its 2021 second-quarter earnings report.
Previously, Velodyne founder David Hall was removed as chairman of the board and his wife, Marta Thoma Hall, stepped down as chief advertising and marketing officer following an investigation by the board in 2012 for “inappropriate behavior”. Work was lost. Legal fees for the plays cost Velodyne $3.7 million in the first half of 2021. In May last year, Hall wrote a letter blaming SPAC, with which Velodyne was merged, for the company’s poor financial efficiency.
a new way forward
The mixed firm’s board of administrators will consist of eight members, four from Auster’s board and four from Velodyne. Auster’s current co-founder and CEO Angus Pakala will be the CEO of the new company. Tewksbury will serve as the official chairman of the board.
In an announcement, Oster said the merger would increase operational efficiencies, more than likely eliminate redundancies. This generally means layoffs will follow, but the companies did not respond in time to TheLike’s request for comment.
With a mixed industrial footprint and distribution community, the brand new firm expects to ship greater quantities of the product at lower prices, Oster said.
The merger, which would see Velodyne’s stock closing for 0.8204 shares of Oster, is projected to be completed within the first half of 2023, pending shareholder approval by each firm. Oster and Velodyne will continue to operate independently of their companies until the transaction is completed.