Luminar, a Florida-based startup that manufactures LIDAR sensors and other components that are essential for autonomous driving technology, is the latest transportation company to go public through a ‘reverse merger’ with a dedicated purchasing company, or SPAC.
The company announced Monday that it was merging with Gores Metropoulos, a so-called “blank check” company sponsored by a subsidiary of The Gores Group, a global investment firm. As a result, Luminar will be a publicly traded company listed on NASDAQ under the new ticker “LAZR.” The Gores group has been called “the king of SPACs” for the number of reverse mergers it has drawn.
The combined company will have an ‘implied pro forma business value’ of approximately $ 2.9 billion and an equity value of $ 3.4 billion at closing. Luminar will receive a direct investment of $ 170 million led by Alec Gores, Van Tuyl Companies, Peter Thiel, Volvo Cars Tech Fund, Crescent Cove, Moore Strategic Ventures, Nick & Jill Woodman and VectoIQ.
Unlike conventional initial public offerings, reverse mergers can be completed in a matter of months. Some SPACs earn money from investors without a detailed business plan. The sole purpose of these empty control companies is to find another company to merge with. If they are unable to do so within two years, they will often fill out and get investors their money back.
The benefits of SPACs for retail investors are thought to be minimal, experts say, because sponsors from low-income firms are often able to buy substantial stakes in the company they are merging with minimal costs.
Reverse mergers are the rage of futuristic transportation companies. Tesla’s rising share price – which is currently trading at around $ 2,000 a share – is thought to have fueled some of the frenzy. Hydrogen trucking company Nikola, electric pickup truck Lordstown, EV startup Fisker, and electric minivan company Canoo are just a few of the companies to raise money on a sudden financing frenzy in the space for starting up electric cars, which fresh money has looked to Karma Automotive, China’s Li Auto and XPeng, and others.
Luminar was founded in 2012 and counts among its supporters Peter Thiel and Volvo, who said earlier this year that it will launch Luminar technology to launch autonomous driving in their cars beginning in 2022. Luminar also supplies Audi and Toyota Research Institute. LIDAR, the laser sensor that sends millions of laser dots per second and measures how long it takes to bounce back, is seen as an important ingredient for autonomous driving.
