The race to autonomous vehicles continues apace, with billions of dollars fueling startups and partnerships, plus continuing market consolidation. Self-driving technology company Aurora yesterday announced that it has agreed to merge with Reinvent Technology Partners Y and that it plans to be publicly traded upon closing of the proposed transaction.
“Our goal at Aurora is to make the movement of goods and people more equitable, productive, dependable, and—crucially—much safer than it is today,” stated Chris Urmson, co-founder and CEO of Aurora. “By combining with Reinvent and with this incredible group of investors, we are even closer to deploying self-driving vehicles and delivering the benefits this technology offers the world.”
Founded in 2017 by self-driving luminaries Sterling Anderson, Drew Bagnell, and Urmson, the Pittsburgh-based startup has about 1,600 employees. Aurora plans to launch its SAE Level 4 Aurora Driver first in trucking, a $700 billion market, in late 2023. The company said it plans to use its experience from that market to rapidly expand into adjacent verticals including last-mile delivery and ride-hailing, which total $9.4 trillion annually.
Aurora partners to scale commercialization
Aurora Driver includes software, hardware and data services to autonomously operate passenger vehicles, light commercial vehicles, and heavy-duty trucks. Aurora said it has made extensive technical investments across the self-driving stack, including its long-range, multi-modal sensing suite with FirstLight Lidar, its Virtual Testing Suite, and the Aurora Atlas HD mapping system.
The company has partnered with Volvo Group (including Volvo Autonomous Solutions) and PACCAR (including the Peterbilt and Kenworth brands), which together represent about 50% of the Class 8 trucks sold in the U.S. market. They will help it develop, validate, and deploy self-driving trucks.
Aurora also said it plans to rapidly scale passenger mobility with partner Toyota, the world's No. 1 OEM supplier, and Uber, the world's largest ride-hailing network by market cap. Late last year, Aurora acquired Uber's Advanced Technologies Group for $400 million, and it acquired lidar startup OURS Technology in February.
The company is testing its systems and next-generation approaches to perception and decision-making in the San Francisco Bay area, Pittsburgh, and Dallas.
Transaction details
“We believe Aurora will be the first to commercialize self-driving technology at scale for the U.S. trucking and passenger transportation markets based on its industry-leading team, technology and partnerships,” said Mark Pincus, Co-Founder and Director of Reinvent Technology Partners Y. The special-purpose acquisition company (SPAC) is led by Pincus, Michael Thompson, and Reid Hoffman.
Investors and Aurora partners have committed $1 billion in a private investment in public equity (PIPE), and the proposed transaction represents an equity value of $11 billion for Aurora. Investors in the PIPE include Baillie Gifford, funds and accounts managed by Counterpoint Global (Morgan Stanley), funds and accounts advised by T. Rowe Price Associates, Inc., PRIMECAP Management Co., Reinvent Capital, XN, Fidelity Management and Research LLC, Canada Pension Plan Investment Board, Index Ventures, and Sequoia Capital. Uber, PACCAR, and Volvo Group also made strategic investments.
The pro forma implied market capitalization of the combined company will be $13 billion, at the $10 per-share PIPE subscription price and assuming no public shareholders of Reinvent exercise their redemption rights. The combined company is expected to have approximately $2.5 billion in cash at closing, including up to approximately $977.5 million of cash held in Reinvent’s trust account from its initial public offering, which closed on March 18, 2021, assuming no public shareholders of Reinvent exercise their redemption rights.
Upon closing of the transaction with Reinvent, the combined company will be named Aurora Innovation Inc., and its common stock is expected to be listed on Nasdaq with the ticker symbol “AUR.” The proposed transaction is expected to close in the second half of 2021, subject to the satisfaction of customary closing conditions, including the approval of shareholders of Reinvent and the stockholders of Aurora.
Existing Aurora stockholders are expected to own approximately 84% of the pro forma combined company following the close of the proposed transaction. Reinvent and Aurora have agreed to a lock-up on founder shares held by Reinvent’s sponsor and its directors for up to four years. Certain major stockholders, key executives and board members of Aurora have agreed to a similar lock-up on their shares and priced-based vesting for Reinvent sponsor shares. Additional information can be found in Reinvent's submissions to the U.S. Securities and Exchange Commission (SEC).
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