Ouster and Velodyne Announce Plan to Merge on Equal Footing

The combination anticipated to improve financial situation, with a combined Q3 cash of $355 million and an expected annualized cost reduction of at least $75 million.

James Davis

A prominent global operator in lidar sensors and solutions, Velodyne (NASDAQ: VLDR, VLDRW), and Ouster (NYSE: OUST), a leading provider of high-resolution digital lidar, have announced that they have signed a definitive agreement to merge.

Through superior product offerings, improved operating efficiencies, and a complementary client base in quickly expanding end-markets, the proposed merger is anticipated to generate considerable value creation and produce a strong financial position.

Principal Strengths of the New Company:

  • An efficient cost structure is supported by operational synergies between engineering, manufacturing, and general administration.
  • Robust product offerings, including vertically integrated software, to cater to a wide range of customers
  • Reduced product costs, a creative roadmap, and a complementary customer base, partner network, and distribution channels all work together to speed up the adoption of lidar across quickly expanding end markets.
  • A substantial intellectual property portfolio with 173 granted and 504 pending patents is supported by a combined 20 years of experience in the development of lidar technology.

Dr. Ted Tewksbury will serve as executive chairman of the board and Angus Pacala will serve as chief executive officer for the world-class leadership team.

Exceptional financial standing, with a combined cash balance of almost $355 million as of September 30, 2022.

Annualized operational expenditure synergies of at least $75 million are anticipated to be realized within 9 months of the transaction's closing when compared to stand-alone cost structures as of September 30, 2022.
“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,” said Ouster CEO Angus Pacala. “Together, we will aim to deliver the performance customers demand while achieving price points low enough to promote mass adoption.”

While executing on a new product roadmap to address the market's future needs, the combined firm will offer a strong suite of products to continue serving a variety of end-markets and clients.

To bring more inexpensive and effective sensors to consumers, an united technical team, an appealing product roadmap, and a laser-focused customer success team will work to deliver best-in-class support.

Additionally, management intends to reduce operating costs in order to create a cost structure that is consistent with the combined company's anticipated revenue growth.

The combined firm anticipates delivering higher volumes, lowering product costs, and fostering sustainable growth thanks to an expanded worldwide commercial footprint and distribution network.

“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,” said Velodyne CEO Dr. Ted Tewksbury. “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.”

Leadership and Governance

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 Board will be comprised of eight members, with each company appointing an equal number of members. The full Board and executive team will be announced at a later date.

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