Business

The family battle in Velodin underscores the pitfalls of the Spac deal


David Hall և Brad Kalkin are inventors, longtime partners և in-laws.

But after the Spac deal’s the acquisition of their company Velodin Lidar’s table, they say, Holly says, they are now locked in a “fight to the death.”

Hall, the founder of the 3D sensory business, was ousted earlier this year, but remains the largest shareholder, and is now determined to respond to any other member of the’s Kalkin և board who helped oust him.

Last week, Hall used a majority of his vote to include activist investor Eric Singer on the board. “He’s going to drive those cockroaches out of there,” Hall told the Financial Times. “I want them not to hear about them anymore in my whole life, just like my children’s lives.”

Developments in Velodin are another example of the pitfalls of specialty companies that have made their way to public markets faster than traditional listings but have also been used by high-risk, venture-controlled enterprises. The company’s share price has fallen by more than 50 percent this year during a public debate.

According to the spokesperson, the company continues to implement “a strategy designed to stimulate the company’s long-term growth. [ . . . ] with the highest standards of corporate governance. “

Revenue decline

Velodyne is a leading manufacturer of lead-based rotating laser devices in the United States, used by self-driving vehicles to “see” roads and obstacles. Ahead of its $ 1.6 billion deal with Spac ahead of the public market, regulatory documents described it as “a fast-growing, fast-growing business.”

Car equipped with a Velodyne’s laser system that uses lasers to “see” the roads and obstacles © Velodyne Lidar

However, the company’s problems disappear for years, according to regulatory documents, people familiar with the company.

Hall founded Velodyne in 2016, raising an initial $ 150 million from Ford Ba Baidu China. Investors also became potential customers, buying millions of dollars worth of goods.

According to the data, in 2017, Velodin earned more than $ 180 million, mainly from one-time sales to research teams from companies such as Uber, which developed self-driving cars. That year, Velodyne sensor sensors sold at a weighted average price of almost $ 18,000 each.

But as competitors flooded the market, the price of leader sensors plummeted. Velodin said he had actively lowered his prices to increase technology adoption, but by 2019 its revenues had fallen by more than 40 percent.

In 2018, the company accused Hesai, a Chinese competitor that also received funding from Baidu, of reversing the design of its rotating didin sensors. Last year, it settled a dispute with Hesai, another Chinese company, over royalties on licensing fees.

But Hall said the alleged theft of Velodin samples “spoiled” the leader market.

“Family Business”

At the same time, several people familiar with the company accused Holly of running it as a family business, sometimes hiring her relatives and friends in senior roles.

Regulatory documents show that Hall and his wife, Marta, who remain on the Velodin council, borrowed $ 23.4 million from the company to finance the $ 43.4 million headquarters building in San Jose, California. A company owned by The Uyghur then’s paid Velodin millions of dollars in annual rent to use the building.

Last month the halls sold the property For $ 51.4 million, repaying more than 200% of their initial investment. Hall said the deal was “blunt” that he was charging the company less than the market.

Answering questions about the jobs held by his family members, Hall said: “It’s a marginal nepotism, it’s a little out of control. I’m going to stop it someday. “

Road to public markets

In January 2020, Hall stepped down from his day-to-day management, nominating Anand Gopalan as CEO as the company began to consider an IPO. Hall said at the time that Gopalan was “the right leader to lead Velodin in his next growth phase.”

Velodin had initial discussions about the IPO, but investors found it difficult to assess the company after several years of declining profits, say two people familiar with the process.

Another version was presented as an epidemic hit. Spacs or empty vehicles designed to join the company and bring it to public markets.

Graf Industrial Corp., which had already refused to negotiate with a polypropylene recycling company, began discussions with Velodyne in May. In June, companies began asking investors for additional support to increase Spac’s cash investment, which was helped by Bank of America և Oppenheimer consultants.

According to investors, it was predicted that Velodin revenues will start to grow again – in 2024 it will reach more than 680 million US dollars, more than half of the business will come from new multi-year contracts, software sales and subscriptions. In 2020, the company had $ 94 million in revenue.

The deal was announced in July, and in the weeks leading up to the Velodin listing in September, the stock price of the car reached $ 32 in a short period of time. Calkin, who co-founded the audio company with Holly, from which Velody came out, came out with millions of shares of the blackboard seat.

At the same time, Ford negotiated the release of liberation contracts, which usually restrict early importers, and sold its entire stake in Velodin in the fourth quarter. Ford still using Velodyne technology said The sales “were in line with our efforts to make the most of capital.”

Fight for control

Months after he went public, Hall demanded a change in the board, which would allow him to appoint six of the eight directors and fire the CEO, according to Velodin.

The board’s audit committee began investigating Hall, his wife, claiming that in February they were “misbehaving with the board’s company.” Velodin removed Holly as chair, without disclosing the specifics of the investigation.

Anand Gopala, CEO of Velodin

Anand Gopalan Appointed CEO After Hall Returns From Daily Ruling In January 2020 © Velodin Lidar

In a statement to the FT, Velodin said that alleged abuses by David J. Martha Holler “increased sharply” after the Dahlor Council’s proposals were rejected. Velodin said members of the council other than Martha Hall rejected Hall’s claims, which she said contained “baseless allegations.”

After he was fired, Hall accused Kalkin of taking “some freedom with the truth” as a “rubber stamp.” Kalkin did not respond to a request for comment.

One day after the annual shareholders’ meeting last week, Velodin announced that he had initiated arbitration proceedings against Hall on charges of breach of contract and theft of trade secrets.

In a separate statement, the company said Hall had copied “hundreds of thousands” of Velodyne documents to at least one external hard drive before returning his company laptop. Through a spokesman, Hall declined to comment on the arbitration.

Hall said he was misled by lawyers and Spac executives during the merger, which he said would allow him to maintain control of the company. Graf և Gunderson Dettmer, the law firm representing Velodin during the Spac discussions, declined to comment.

Investors are losing nurses

At the same time, investors have posted complaints on the Reddit message board called in recent weeks so that the halls give up their fight with the company. Shares traded around $ 11 on Wednesday.

Outside observers predicted that several companies that had difficulty merging with Spacs could become the main targets of activist shareholders. Many have not yet found commercial success for futuristic technology and are still run by relatively inexperienced teams.

“These are all components you need for instability և activist interventions,” said Ethan Klingsberg, a partner at Freshfields Law Firm, which provides corporate governance advice.

Additional report by Sujeet Indap in New York



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