Velodyne Lidar (NASDAQ:VLDR) stock rose sharply overnight after announcing it with rival Ouster (NASDAQ:OUST).
Ouster stock was also up in overnight trading.
The combined companies will not be huge. Velodyne is worth about $200 million. Analysts think it could have revenue of $39 million this year. Ouster is worth about $220 million. Management expects it to have sales of $40-55 million.
Lidar the Way Down
Lidar is an acronym for “.” It’s used in all sorts of mapping applications, as well as in .
A few years ago, when such cars seemed imminent, Ouster and Velodyne were hot stocks. Ouster once traded at over $16 but now trades at a little over $1. And Velodyne was once over $25 and now trades under $1. Both companies are based in the San Francisco area.
Ouster reported the merger , it reported a revenue of $11.7 million and a net loss of $36 million. Velodyne will report its quarterly results after the market closes .
The Velodyne release on the merger says the combined companies will have and can save $75 million in costs by combining. Ted Tewksbury, who joined Velodyne , will be the executive chairman.
, co-founder of Ouster, will be CEO.
Before the merger, the two companies over intellectual property. The amount of stock Ouster is putting into the deal is little more than the cash Velodyne had at the end of June. The deal implies a value of 96 cents/share for Velodyne. Overnight trade brought it right up to that mark.
VLDR Stock: What Happens Next
This is one of those “1+1=1” mergers you often see after a market crashes. The hope is that when combined, Ouster and Velodyne can get through the coming recession with their operating budget intact.
The merger may also spur more such deals. Shares in other Lidar companies, like Luminar Technologies (NASDAQ:LAZR), Innoviz (NASDAQ:INVZ), MicroVision (NASDAQ:MVIS) and Indie Semiconductor (NASDAQ:INDI), all rose on the news.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
