Ouster (OUST) is set to acquire Sense Photonics, a developer of digital solid-state lidar sensors commonly used in the auto industry. The acquisition is poised to strengthen the company’s position in the auto industry. OUST shares rose 2.09% to close at $7.31 on October 5.
Under the terms of the deal, Ouster will acquire 100% of Sense Photonic’s capital stock for 9.5 million OUST shares. The company’s management expects an impact of about $17 million in additional operating expenses in 2022 following the acquisition. The transaction should close in the fourth quarter of 2021.
The closing of the all-stock deal will pave the way for the establishment of Ouster Automotive, a unit that will spearhead the adoption of digital lidar in the auto industry. The unit should strengthen Ouster’s position across various auto verticals. (See Ouster stock charts on TipRanks)
The acquisition is poised to accelerate Ouster’s solid-state ambitions by more than one year. The company has already invested about $24 million in developing lidar solutions over the last three years. In addition, Ouster will get an opportunity to leverage a lidar solution with a 200-meter range.
Sense CEO Shauna McIntyre stated, “We have a terrific opportunity to marry our two platforms to capture additional automotive design wins.”
Ouster will also get an opportunity to advance five series production programs with a revenue base of over $1 billion. Ouster expects to retain key Sense talent with significant engineering, semiconductor, and automotive expertise, strengthening its competitive position.
In August, Citigroup analyst Itay Michaeli reiterated a Buy rating on the stock and raised his price target to $18 from $17, implying 146.24% upside potential to current levels.
Consensus among analysts is a Moderate Buy based on 2 Buys. The average Ouster price target of $17 implies 132.56% upside potential to current levels.
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