July 29, 2024, high-performance LiDAR solutions provider Cepton announced the signing of a definitive agreement to be acquired, and will become a subsidiary of the acquirer in the United States.
According to the agreement, the acquirer is the internationally recognized automotive lighting powerhouse KOITO, which was founded in 1915 and has a history of more than a hundred years, is a Japan-based automotive lighting Tier 1 supplier, Mercedes-Benz, BMW, Toyota, Nissan, etc. are its customers, and at the same time, KOITO is also a long-time partner and investor in the acquirer, Cepton.
Today, KOITO will acquire its entire issued share capital in an all-cash transaction at a price of $3.17 per share. Upon completion of the transaction, the NASDAQ-listed LiDAR company will become a subsidiary of KOITO in the United States.
Back on December 22, 2023, KOITO made an announcement that it would enter into negotiations with Cepton to acquire its shares and make it a subsidiary. The announcement indicated KOITO's intention to wish to acquire 100% of the issued shares of Cepton (which are issued shares of the Company not already owned by Koito or certain other potential rollover participants).
The parties have now entered into a merger agreement, but the transaction is still subject to approval by Cepton's shareholders, approval by the U.S. authorities and other conditions precedent as set out in the merger agreement.
Cepton is expected to become a subsidiary of KOITO in the first quarter of 2025. The reason why Cepton will be its own subsidiary in the US was also explained by KOITO.
Based on the background of the automotive industry, with the development of ADAS and autonomous driving systems and the increased demand for peripheral monitoring using various sensors, LiDAR's advantages of high accuracy, high interference immunity, and true 3D sensing will usher in a wider range of applications as a core sensor in the market in the future.
Therefore, in the second year after Cepton's founding (established in 2016), KOITO chose to work with it to jointly develop LiDAR for the infrastructure sector and automotive applications such as passenger cars, industrial machinery, construction machinery, and agricultural machinery. In fact, the two sides of the "origin" as early as 2017 has kicked off.
However, the reality of the "bone" Cepton's good times did not last long. Cepton was founded by Stanford University technologists, in 2021 through a merger with a special purpose acquisition company listed on the Nasdaq, the company's corporate valuation of up to $ 1.5 billion.
With a keen sense of smell, Cepton did capitalize on a wave of growth during the boom cycle of autonomous driving and LiDAR concepts. But as the boom faded, Cepton as if it had not yet realized that "extreme involution" has quietly come, do not adjust the strategic layout and do not open up new markets, with the word "isolated" to describe Cepton is not too much.
On December 11, 2023, Cepton, which thought that it could develop peacefully by clinging to the wings of others, received a blow to its head!
A major ADAS program that had planned to select Cepton and KOITO as the sole LiDAR supplier, with a volume supply contract lasting until 2027, was suddenly canceled. The partner informed KOITO that its OEM would be redefining the scope of supply of the product. Immediately thereafter all purchase orders issued by KOITO to Cepton were canceled.
Upon that news, Cepton shares plummeted 26% that day. Then, on December 22nd, KOITO's acquisition intention was welcomed, and this series of "operations" also triggered infinite reverie among the industry insiders.
In April 2024, the short-range LiDAR developed by the two companies was ordered to be used in L4-class self-driving vehicles.
According to relevant information, KOITO had invested 50 million dollars in 2020, 50 million dollars in 2021 and another 100 million dollars in 2022 in Cepton.
Returning to the benefits of KOITO's acquisition of Cepton, in addition to the inevitable development of the industry, KOITO believes that the technological combination of the two companies can further strengthen its market competitiveness in the LiDAR business, and that synergies between the automotive lighting equipment, transportation systems business and sensor technology will enable KOITO to achieve new growth targets.
The transaction will be effected through a reverse triangular merger, whereby Cepton will be merged into a wholly-owned subsidiary of an intermediate holding company established by KOITO in the U.S. It will become a wholly-owned subsidiary of the intermediate holding company and will continue to maintain the operations of its existing business and programs.
It is expected that KOITO will hold approximately 94.1% of Cepton's shares through the intermediate holding company, and Cepton's CEO and principal shareholder, Mr. Jun Pei, as well as a number of other existing shareholders, have donated in-kind a portion of their respective holdings of common stock of Cepton to the intermediate holding company and have received a partial ownership interest in the intermediate holding company.
For its part, KOITO claims that the acquisition complements the company's existing sensor technology portfolio while providing Cepton with greater financial stability and scalability to commercialize its LiDAR technology.
