The global leader in video processors for automotive cameras, GEO Semiconductor, Inc., has entered into a final agreement to be acquired by independent Semiconductor, an innovator in Autotech solutions. A complete sensor fusion of Radar, LiDAR, Ultrasound, and Computer Vision solutions in advanced driver-assistance systems (ADAS) applications is now possible thanks to the acquisition of GEO, a private fabless semiconductor provider. Under normal closing circumstances, the deal is anticipated to conclude in the first quarter of 2023.
GEO’s market-leading camera-based sensing and viewing capabilities, which are protected by 100 international patents, are already being shipped to some of the biggest car OEMs in the world, including Honda, Hyundai, Kia, Nissan, and Toyota. GEO has projects with every major image sensor supplier in the world and is involved in several EV and autonomous vehicle programs. GEO has design victories spanning more than 20 Tier 1s and 400 automobile types.
With more than 20 cameras on board next-generation vehicles providing a variety of purposes from the object and lane identification to surround view, night vision, and driver and occupant monitoring, image processing systems are playing an increasingly important role in ADAS applications. Together, these features are allowing important use cases including increasing degrees of driving automation, lane change assistance, highway pilot, e-mirror, blind spot recognition, and occupant safety. In fact, IHS predicts that 265 million camera ECUs would be required to serve the global automotive industry in 2023, rising to 430 million units by 2028 and creating an $8.5 billion total addressable semiconductor market. This is due to the increasing attach rate of cameras around the vehicle.
The three generations of application-specific camera video processors offered by GEO include those aimed at watching, where the video is displayed for the driver to observe, and sensing, where the video is processed with the help of cutting-edge computer vision and machine learning algorithms. Indie will be able to offer solutions in a variety of applications, from straightforward backup cameras to complete Autonomous Driving systems, thanks to the special ability to handle both of these important categories.
“It’s rare that acquisition targets are a perfect fit, but this is indeed the case with GEO. Camera processing is at the core of the majority of use cases within ADAS applications. indie’s acquisition of GEO Semiconductor immediately rounds out our Computer Vision product portfolio with field-proven, differentiated solutions, enabling us to capitalize on the rapid proliferation of automotive image processors. At a higher level, GEO is complementary in terms of products, customers, and global sales channels while, at the same time, highly synergistic operationally with massive cross-selling opportunities,” said Donald McClymont, indie’s co-founder, and CEO. “Further, this acquisition completes our sensor fusion mosaic spanning Radar, LiDAR, Ultrasound, and Computer Vision, bringing us a major step closer towards realizing our strategic vision of enabling the uncrashable car and creating an Autotech powerhouse.”
“We are extremely excited to be joining forces with indie. As a relatively small private company, GEO has made remarkable progress since our founding in 2009 and a full pivot to automotive product development in 2015. We’ve launched truly breakthrough vision processing ADAS solutions but were limited in the size of programs we could win,” said Dave Orton, GEO Semiconductor’s president, and CEO. “Leveraging the indie platform and their proven scalability, we can now unleash GEO’s full potential and offer leading Tier 1s and car OEMs unprecedented camera resolution, low latency, power efficiency, and ultra-fast processing of image data for enhanced safety systems within next-generation vehicles.”
Depending on the terms and circumstances of the definitive agreement, Indie will pay the equity and debt holders of GEO a total of $180 million at closure, which will be made up of $90 million in cash and around 12 million shares of Indie Class A common stock, based on a 20-day VWAP. Additionally, these investors have the chance to earn up to $90 million more in equity, pegged between $8.50 and $11.50 per INDI Class A common share, provided certain performance goals are met over an 18-month post-closing term. The boards of directors of GEO and independent have both given their approval to the deal. According to Indie, the purchase will increase non-GAAP profits per share in 2023.
Without registration under or exemption from the Securities Act of 1933, the securities that will be issued in conjunction with the transaction cannot be sold again. No offer to purchase or solicitation of an offer to sell any securities is intended by this news release.
indie Business Update
Based on preliminary results, indie is reaffirming Q4 2022 guidance. “indie continues to substantially outpace our addressable markets and is effectively navigating the global supply chain environment on the strength of our Tier 1, automotive OEM and supplier relationships. In fact, based on our Q4 revenue guidance, we expect to post 2022 top-line growth of 129 percent versus 2021. Entering the new year, the stage is set for sustained top-line outperformance and we remain laser-focused on achieving profitability in the second half of 2023. Depending upon the closing date, our acquisition of GEO should add at least $40 million to our 2023 revenue base and enable us to accelerate our path to profitability,” said Thomas Schiller, CFO, and EVP of strategy.
During its future earnings conference call, scheduled for February 16, 2023, following the market close, independent expects to give further financial information.
