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31 Jul 2024
Japanese provider of automotive lighting had emerged as the US lidar company's primary supporter.
Cepton, the California-based developer of lidar technology, has signed a deal that will see it become a subsidiary of Japan’s Koito Manufacturing.
Koito, which specializes in automotive lighting products and had also invested tens of millions of dollars into the San Jose startup, is set to acquire all of Cepton’s outstanding capital stock for $3.17 per share - equivalent to just under $50 million - in cash, assuming that the lidar firm’s shareholders approve the deal.
The two firms have been development partners since 2018, with Koito initially proposing the acquisition earlier this year, after key customer General Motors cancelled an advanced driver assistance systems (ADAS) project involving Cepton lidar sensors that had been expected to move into series production.
“The proposed transaction is poised to accelerate the commercialization of Cepton’s lidar technology through increased financial stability and scalability,” announced the two firms.
“The integration of Cepton...is expected to enhance Koito’s capabilities in automotive sensing solutions with strengthened technology advancement, product offerings, and market penetration into new verticals.”
Koito also said that in April this year a short-range lidar product co-developed by the two firms was selected and ordered for use in peripheral monitoring for so-called "Level 4" automated vehicles - meaning fully automated driving under certain conditions, such as on highways and in limited areas.
Industry challenges
Cepton’s CEO, co-founder, and major shareholder Jun Pei commented: “Over the past few years, we have achieved many remarkable milestones in product innovation and development, establishing ourselves as one of the most trusted lidar solutions providers in the automotive industry. A significant portion of our efforts were greatly supported by Koito as our long-term partner and investor.
“Our partnership with Koito will provide us with unique access to a broader range of opportunities and resources and help us stay resilient to industry challenges in a way no other lidar company can.
“This will position us as a leading automotive lidar company for years to come, as Cepton continues to execute current automotive programs and actively manage future OEM initiatives.”
Michiaki Kato, Koito’s president and COO, added: “We appreciate and are impressed by the outstanding technical capabilities exhibited by the Cepton team throughout our years of collaboration.
“We recognize this proposed transaction is an essential step toward realization of Koito’s vision of ‘lighting the way for our sustainable future.’ We are convinced that having Cepton as a member of the Koito group will significantly enhance the competitiveness of our sensor business.”
Crowded market
One of a slew of lidar startups to list on US stock market in recent years, Cepton was founded by Stanford PhD Pei and Mark McCord in 2016, and quickly raised tens of millions of dollars from investors looking to cash in on the technology’s potential in ADAS and autonomous driving.
With those markets yet to really take off, Cepton and many of its rivals have been burning through investor cash, while also targeting adjacent sectors such as industrial automation and robotics.
Cepton’s most recent financial results, covering the opening quarter of 2024, showed an operating loss of $11.5 million on sales revenues of only $2 million - although at that point the company still had close to $50 million in cash and equivalent assets on its balance sheet.
Assuming that it is completed as planned in early 2025, Koito’s acquisition would yield Cepton shareholders around a 25 per cent premium on recent trading levels, but a huge loss on the stock’s peak value of $121, achieved in February 2022.
• AEye, one of Cepton’s many rivals in the automotive lidar sector, has agreed a lifeline with financier New Circle Capital that could enable it to raise up to $50 million.
Like Cepton, AEye has been burning through its cash pile, reporting in May a $10.7 million operating loss on negligible sales. As of the end of March its balance sheet showed $9.5 million in cash and equivalent assets, alongside $19.4 million in marketable securities.
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