LiDAR solutions provider Cepton acquired by KOITO

On July 29, 2024, Cepton, a provider of high-performance LiDAR solutions, announced the signing of the final agreement for its acquisition, making it the acquiring company's subsidiary in the United States.

Image source: Cepton

According to the agreement, the acquirer is the internationally renowned automotive lighting giant KOITO, which was established in 1915 and has a history of over a hundred years. It is a first tier supplier of automotive lighting headquartered in Japan, with customers such as Mercedes Benz, BMW, Toyota, Nissan, etc. KOITO is also a long-term partner and investor of the acquired company Cepton.

Image source: KOITO

Now, KOITO will acquire all of its issued share capital in an all cash transaction at a price of $3.17 per share. After the transaction is completed, this laser radar company listed on NASDAQ in the United States will become a subsidiary of KOITO in the United States.

As early as December 22, 2023, KOITO announced that it would negotiate with Cepton to acquire its shares and make it a subsidiary. The announcement shows that KOITO intends to acquire 100% of Cepton's issued shares (which are not yet owned by Koito or several other potential extension participants).

At present, both parties have signed a merger agreement, but this transaction still requires approval from Cepton shareholders, approval from US authorities, and other prerequisites specified in the merger agreement.

Cepton is expected to become a subsidiary of KOITO in the first quarter of 2025. And KOITO also provided an explanation for why Cepton is considered as its subsidiary in the United States.

Based on the background of the automobile industry, with the development of ADAS and auto drive system and the increasing demand for peripheral monitoring with various sensors, the advantages of laser radar, such as high precision, strong anti-interference, true three-dimensional perception, will be widely used as a core sensor in the future market.

Therefore, in the second year after Cepton's establishment (2016), KOITO chose to collaborate with them to jointly develop LiDAR for the infrastructure sector as well as automotive applications such as passenger cars, industrial machinery, construction machinery, and agricultural machinery. In fact, the "origin" between the two sides began as early as 2017.

However, the reality of "bone feeling" did not make Cepton's good scenery last long. Cepton was founded by technology experts at Stanford University and officially listed on NASDAQ in 2021 through a merger with a special purpose acquisition company, with a company valuation of up to $1.5 billion at the time.

With its keen sense of smell, Cepton has indeed seized the cycle of the boom in autonomous driving and LiDAR concepts, achieving a wave of growth. But as the trend gradually fades, Cepton seems to have not yet realized that the "extreme internal competition" has quietly hit, and it is not an exaggeration to describe Cepton as "settling in a corner" without adjusting its strategic layout or exploring new markets.

Cepton, who thought that relying on others' wings could lead to stable development, received a blow on December 11, 2023!

The original plan for an important ADAS project to select Cepton and KOITO as the sole suppliers of LiDAR, which would receive a bulk supply contract until 2027, was suddenly cancelled. The partner informed KOITO that their OEM will redefine the scope of product supply. Subsequently, all purchase orders issued by KOITO to Cepton were cancelled.

As soon as the news was released, Cepton's stock price plummeted by 26% on the same day. Then, on December 22nd, KOITO's acquisition intention was immediately welcomed, and this series of "operations" also sparked infinite imagination among industry insiders.

In April 2024, the short-range LiDAR jointly developed by both parties was ordered for L4 level autonomous driving vehicle orders.

According to relevant information, KOITO invested $50 million in Cepton in 2020, $50 million in 2021, and another $100 million in 2022.

Returning to the benefits of KOITO's acquisition of Cepton, in addition to the inevitability of industry development, KOITO believes that the technological combination of the two companies can further enhance their market competitiveness in the LiDAR business. The collaborative cooperation between automotive lighting equipment, transportation system business, and sensor technology will enable KOITO to achieve new growth goals.

This transaction will be conducted through reverse triangulation. Cepton will merge into a wholly-owned subsidiary of KOITO's intermediate holding company established in the United States, becoming a wholly-owned subsidiary of the intermediate holding company and continuing to maintain the operation of its original business and projects.

It is expected that KOITO will hold approximately 94.1% of Cepton's shares through an intermediate holding company. Mr. Cepton's CEO and major shareholder Jun Pei and several other existing shareholders donated a portion of their Cepton common stock in kind to an intermediate holding company and obtained partial ownership rights in the intermediate holding company.

KOITO claims that this acquisition supplements the company's existing sensor technology portfolio and provides Cepton with greater financial stability and scalability to commercialize its LiDAR technology.

Source: OFweek