Velodyne and Ouster — two of the bigger names in the lidar field — have entered into an agreement to merge in an all-stock transaction.
According to both companies, merging creates value and will result in a strong financial position. Additionally, combining technology and resources will:
- Create synergies for engineering, manufacturing and cost-structure
- Serve a broader set of customers with product offerings including verticalized software
- Help accelerate lidar adoption across end markets with reduced product costs
- Offer a complementary customer base, partners and distribution channels
- Create a combined cash balance of $355 million
The merger is subject to closing conditions and regulatory guidelines as well as approval of both boards. Both companies will operate independently until the merger closes, which is expected in the first half of 2023.
Why this is important
As with many emerging industries, a host of players get into the market hoping to capitalize on the opportunity. But not everyone will make it on their own either because of a saturated market or due to technological hardships. Eventually, mergers and acquisitions happen to even out the field and create less competition.
The lidar market has a lot of vendors.
They are all competing for the future of advanced driver assistance systems (ADAS) and eventually autonomous driving. This is the main market for lidar and will continue to be the main driver for the market moving forward. Lidar has its place in other markets as well including smart cities, remote monitoring, surveying, the internet of things (IoT) and more. But in terms of volume, the automotive market will be king.
There are far less automotive OEMs than lidar makers and that means not everyone will be getting a piece of the pie.
Overall, this shows that even companies that have successfully gained supply chain endorsements and design wins believe they are better off together than apart. It is likely this will not be the first merger or acquisition the market sees coming from the lidar sector.
