San Francisco Lidar Startup Ouster to Go Public in a Deal Worth $1.9 Billion

author: Eric Walz   

San Francisco-based Lidar company Ouster has agreed to go public in a deal that would value the company at $1.9 billion. Ouster plans to merge with special purpose acquisition company (SPAC) Colonnade Acquisition Corp. (NYSE: CLA).

Upon closing of the business combination, the combined company will operate as Ouster, Inc., and is expected to remain listed on the NYSE under the ticker symbol "OUST".

Transaction expected to provide up to $300 million in gross proceeds, comprised of Colonnade Acquisition Corp.'s $200 million of cash held in trust and a $100 million fully committed common stock PIPE at $10.00 per share, including from Ouster's existing investors, Cox Enterprises, WWJr Enterprises and Fontinalis Partners, which is co-owned by Ford Motor Executive Chairman Bill Ford.

The business combination values Ouster at an approximately $1.6 billion pro forma post-money enterprise value at a share price of $10.00, assuming no redemptions by Colonnade shareholders and no purchase price adjustments. 

The capital from the business combination is expected to be used for the development and manufacturing of high-performance digital lidar sensors, software development and build-out of Ouster's sales and marketing efforts.

"We are excited to partner with Ouster to drive the next phase of its growth. As an innovation-driven lidar company, Ouster is led by an experienced management team with deep technical knowledge and strong business momentum," said Colonnade Chief Executive Officer Remy W. Trafelet.

Ouster will become the fifth lidar company to go public in recent months, following the recent IPO of Volvo-backed Luminar Technologies Inc. and Velodyne Lidar Inc. Innoviz and Avea Inc. are expected to launch IPOs in early 2021. All of the companies entered into reverse merger deals with SPACs to launch their IPOs. 

The term lidar, is an acronym for "light detection and ranging". Lidar sensors use laser beams which reflect back off objects. The light reflected back provides a 3D representation of a vehicle's surroundings. The lidar images can be used to identify other vehicles, pedestrians, trees and buildings.

Lidar is considered an essential sensor for self-driving cars to "see" objects, but is also a vital sensor for vehicles equipped with advanced driver assist systems (ADAS). Features such as Automatic Emergency Braking (AEB) and Adaptive Cruise Control (ACC), rely on a combination of vehicle sensors, including lidar.

As more vehicles come standard with AEB, ACC or hands-free highway driving capabilities, lidar demand is expected to grow over the next decade, which is one of the reasons lidar startups are turning to the public markets to raise capital. The companies are looking to supply low-cost automotive-grade lidar sensors to the world's automakers.

Luminar, which launched its IPO earlier this month, was chosen by Sewdish automaker Volvo Cars to be its lidar supplier. Volvo was an early backer of Luminar. Luminar also formed partnerships with Daimler Truck AG and Intel's Mobileye.

Ouster intends to supply its lidar to other industries. The company is developing high-resolution digital lidar sensors for industrial automation, smart infrastructure, robotics, as well as automotive applications.

"Ouster is powering the vision for an autonomous future where lidar-powered solutions are ubiquitous and built into every part of the industrial economy. We have established a strong business with a disruptive digital lidar technology, a diversified customer base, and global manufacturing and supply chain capabilities that are scaling toward high volume production. We believe the combination with Colonnade will enable us to further accelerate the adoption of our proven technology across multiple end markets and realize a safer, smarter, more efficient future," said Ouster Co-Founder and Chief Executive Officer Angus Pacala.

Ouster's newest digital lidar sensor is the solid-state ES2.

Ouster was founded in 2015 by Pacala and Mark Frichtl. The co-founders set out to build a low cost yet high performance lidar sensor with the potential to make the world smarter, safer, and more efficient, like other sensor technologies before it. This vision required rethinking the architecture behind high-performance lidar with an explicit focus on manufacturability and affordability. Frichtl serves as Ouster's CTO.

Their work resulted in the invention of Ouster's high-performance digital lidar, based on custom-designed semiconductors and optical innovations, which they brought to market in 2018, the company said.

Ouster's digital lidar sensors are also designed for scalability with many customization options. The company offers over 75 combinations of range, field of view, and resolution configurations to customers.

The boards of directors of both Ouster and Colonnade have unanimously approved the proposed business combination, which is expected to be completed in the first half of 2021. The merger is still subject to customary closing conditions.

As part of the transaction, Ouster will retain its experienced management team. Co-Founder Angus Pacala will continue to serve as CEO, co-founder Mark Frichtl will continue as CTO. Colonnade CEO Trafelet will join the Ouster board of directors upon closing of the deal.

Additional information about the proposed business combination, including a copy of the Merger Agreement and an investor presentation, will be provided in a Current Report on Form 8-K to be filed by Colonnade with the U.S. Securities and Exchange Commission.

The news of the proposed business combination sent Colonnade's stock upward by nearly 40% on Tuesday. The company's stock was trading at $14.06, an increase of 39.48%.

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.