Business Context and Reporting Period
This Form 8-K, dated March 3, 2021, is filed by Colonnade Acquisition Corp. (CLA) regarding its proposed business combination with Ouster, Inc. The filing serves as a supplemental disclosure to the Definitive Proxy Statement/Prospectus following shareholder lawsuits and demand letters alleging insufficient sales processes and inadequate consideration. The extraordinary general meeting to vote on the merger is scheduled for March 9, 2021.
Key Financial Metrics and Valuation
The filing does not provide current revenue, profit, cash flow, or debt figures for Ouster, Inc. or CLA. Instead, it details valuation metrics and projections used during the merger negotiation process:
- Initial Valuation: An initial Letter of Intent (LOI) dated October 26, 2020, valued Ouster at a fully-diluted pre-money equity valuation of $3.1 billion.
- Revised Valuation: The valuation was subsequently reduced to $1.5 billion, citing a tightening PIPE market and the trading performance of peers.
- PIPE Investment: The transaction proposed raising a Private Investment in Public Equity (PIPE) of between $200 million and $300 million, with a Sponsor Related PIPE Investor committing at least $25 million.
- Ownership Structure: Subject to the PIPE size, Ouster and its existing stockholders were projected to own approximately 85% to 87% of the pro forma company.
- Comparative Multiples (as of early December 2020):
- Ouster 2024 Projected EV/Adjusted EBITDA: 6.2x
- Ouster 2025 Projected EV/Adjusted EBITDA: 2.8x
- Ouster 2024 Projected EV/Revenue: 1.9x
- Ouster 2025 Projected EV/Revenue: 1.0x
Material Changes and Negotiation History
The filing discloses a significant material change in the valuation rationale and negotiation timeline:
- Valuation Reduction: Between the initial LOI ($3.1 billion) and the November 13, 2020 board meeting, the valuation was lowered to $1.5 billion. Management attributed this to market conditions and the trading performance of Velodyne Lidar and Luminar Technologies.
- Projection Revisions: Following a call on November 19, 2020, Ouster management revised its "Draft Projections" at CLA's advice to focus more on demand forecasts and product-cost projections, modifying projected costs of goods and unit sales prices.
- Legal Challenges: Shareholder lawsuits (e.g., Vinh Nguyen v. Colonnade Acquisition Corp.) and demand letters were filed alleging fiduciary duty breaches and misleading disclosures. This filing is a voluntary supplement to resolve these claims and avoid delaying the merger.
Guidance, Risks, and Management Commentary
Management Commentary: CLA and its board deny any liability or wrongdoing, stating the allegations lack merit. However, they voluntarily amended the proxy statement to minimize the risk of the merger being delayed or adversely affected by litigation costs and uncertainties.
Risks and Contingencies:
- Transaction Completion: Risks include failure to complete the business combination by the deadline, failure to obtain shareholder approval, or failure to satisfy the minimum trust account amount following redemptions.
- Market Conditions: Risks associated with downturns in the competitive lidar technology industry.
- Valuation Disputes: The filing highlights the absence of a third-party valuation in the decision-making process.
- Forward-Looking Statements: The document contains projections regarding revenue and EBITDA for 2020-2025, which are subject to significant uncertainty.
Investor Verification Checklist
- Verify the final outcome of the shareholder vote scheduled for March 9, 2021, and the status of the pending shareholder lawsuits.
- Confirm the final size of the PIPE investment and whether the $25 million sponsor commitment was fully realized.
- Review the revised financial projections for Ouster (2020-2025) to understand the basis for the $1.5 billion valuation compared to the initial $3.1 billion offer.
- Assess the redemption rate of CLA public shares to ensure the minimum trust account requirement is met.
- Compare Ouster's projected multiples against the actual trading multiples of Velodyne and Luminar post-merger to validate the valuation rationale.