LiDAR maker Luminar to go public through reverse merger

LiDAR maker Luminar to go public through reverse merger

Automotive safety company joining large list of electric vehicle producers using blank-check companies to raise funds.

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August 26, 2020

Cleveland, Ohio – Reverse mergers apparently aren’t just for electric vehicle (EV) producers. Following a spate of merger with investment companies in the EV space, automotive safety company Luminar announced a deal that values the startup at $2.9 billion.

Reverse mergers are quick ways to take startups public. A traditional initial public offering (IPO) requires roadshows to convince investors to support the company, a lengthy regulatory review, and the risk of falling flat if investors don’t respond. Reverse mergers involved special purpose acquisition companies (SPACs), also known as blank check investors.

Private equity funds and other investment groups establish SPACs by raising funds with the intention of buying promising startups within a few years. The publicly traded SPACs have already gone through regulatory review, so when they merge with startups, the startup can almost immediately go public and raise further cash by selling more stock.

In the past month, EV startup Lordstown Motors and autonomous vehicle (AV) startup Canoo have announced reverse mergers. And earlier this year, EV makers Fisker and Nikola announced reverse merger.

The Luminar deal merges it with Gores Metropoulos, a subsidiary of the Gore Group investment company. Following the merger, it will trade shares on the Nasdaq using the LAZR ticker.

Light detection and ranging (LiDAR) is the most popular vehicle vision system used for advanced driver assistance systems (ADAS) and AVs. Cameras interpret light signals to generate complex, 3D maps of conditions around the vehicle, enabling emergency braking and steering to avoid obstacles.

Founded in 2012 by CEO Austin Russell, Luminar will be in most new Volvo vehicles by 2022 and is working with other major automakers to become standard equipment. The company has targeted highway self-driving systems and ADAS as its near-term technology goals.

Luminar has developed its own computer chops and software to support AV applications.

“This milestone is pivotal not just for us, but also for the larger automotive industry,” Russell said. “Eight years ago, we took on a problem to which most thought there would be no technically or commercially viable solution. We worked relentlessly to build the tech from the ground up to solve it and partnered directly with the leading global automakers to show the world what’s possible.”

Following the merger, Luminar will receive about $400 million in cash and $170 million in financing to fund its growth. Volvo and other investors will also gain a stake in the company.

About the author: Robert Schoenberger is the editor of Today's Motor Vehicles and Today's eMobility and a contributor to Today's Medical Developments and Aerospace Manufacturing and Design. He has written about the automotive industry for more than 19 years at The Plain Dealer in Cleveland, Ohio; The Courier-Journal in Louisville, Kentucky; and The Clarion-Ledger in Jackson, Mississippi.

rschoenberger@gie.net