Lidar companies Ouster and Velodyne said Monday they plan to merge.
The two companies signed a merger agreement Friday. Existing Velodyne and Ouster shareholders would each own about 50 percent of the combined company under terms of the "merger of equals" agreement, which is expected to close in the first half of 2023.
Ouster CEO Angus Pacala is expected to hold the same position in the new company. Ouster reported revenues of $11.2 million at the end of the third quarter, an increase of 44 percent year over year.
"Together, we will aim to deliver the performance customers demand while achieving price points low enough to promote pass adoption," Pacala said in a statement.
The companies said they expect to save $75 million per year in "operational synergies" across engineering, manufacturing and administration once the merger is complete. As of the end of the third quarter, they had a combined cash balance of $355 million, they said.
Velodyne and Ouster compete in precision sensors that enable self-driving vehicles to see the world around them. Both companies have been hit hard as timetables for large-scale autonomous vehicle deployment have stretched out.
Ouster shares have lost 77 percent of their value since Jan. 1 and Velodyne was down 80 percent this year before Monday's merger announcement.
"There need to be financially strong companies in this space," Pacala told Reuters on Monday. "Necessary consolidation is happening."
The announcement comes two days before Luminar, a major competitor in the lidar realm, expects to launch its technology with Volvo as standard equipment in its new EX90.