Action camera maker GoPro, which has struggled with management difficulties, will merge with U.S. optics and photonics company Starman Optical and hand over management control. Existing GoPro shareholders will receive a total of $285 million (about 390 billion won) in cash and hold about 10% equity in the company after the merger. After the merger, the company plans to maintain its existing action camera business while expanding into artificial intelligence (AI) data centers and sectors such as defense, aerospace, and robotics.
GoPro and Starman said on the 1st (local time) that they signed a definitive merger agreement. The amount paid to GoPro shareholders is $1.14 (about 1,560 won) per share and may be adjusted based on GoPro's net working capital at the time of closing the transaction. As existing shareholders' equity is reduced to about 10%, the structure effectively shifts management control to Starman.
GoPro's approximately $92 million (about 130 billion won) liability will be fully repaid when the transaction is completed. GoPro will remain listed on Nasdaq after the merger. The boards of both companies have approved the merger plan, and the transaction is expected to be completed by the end of this year pending shareholder and regulatory approvals.
Starman is an unlisted company in the United States that develops and produces optical transceivers and related photonics technology. An optical transceiver is a component that converts electrical signals to light signals or vice versa, enabling high-speed transmission of large-scale data through fiber optics. Demand is increasing as data traffic between servers and AI accelerators surges in AI data centers.
Starman plans to add U.S.-made optical transceivers to GoPro's product lineup to enter the AI infrastructure market. The merged entity will also use GoPro's optical and imaging technology built over 24 years and more than 2,500 U.S. patents to expand into government, defense, robotics, and aerospace markets. It also plans to increase domestic U.S. production of core optical and imaging components.
Charles Tebeley, Starman Holdings chief executive officer (CEO), said, "Advanced optics and imaging technologies are essential to AI, national security, and the broader economy, but many of the key hardware components that support them are still produced overseas," and added, "We will combine GoPro's optical technology and intellectual property with Starman's transceiver capabilities and U.S. manufacturing base."
Behind GoPro's decision to hand over management control are prolonged weak results and liquidity issues. Second-quarter revenue this year was $104.9 million (about 140 billion won), down 31% from a year earlier. First-half revenue this year also fell 28.9% to $204 million (about 280 billion won). GoPro posted an operating loss of $96.2 million (about 130 billion won) in the first half.
In its second-quarter report, GoPro said intensified competition, a slowdown in the consumer market, rising memory prices, and supply constraints affected its results. The company noted that if additional funding or a strategic transaction does not occur, its ability to continue as a going concern could be significantly affected, and it has been reviewing strategic alternatives including a sale or merger. Reuters also cited competition with China's DJI and Insta360 as factors that worsened GoPro's management difficulties.
At the time of its 2014 initial public offering (IPO), GoPro's market value on the first day of trading reached about $4 billion (about 5.48 trillion won), but it has since fallen sharply amid intensifying competition in the action camera market. According to Reuters, GoPro's recent market value has decreased by about 96% from then.
On the day the merger was announced, GoPro's share price closed at $1.23 (about 1,680 won), up 40.38% from the previous trading day. That is above the $1.14 (about 1,560 won) per-share cash payment promised to existing shareholders.
Nicholas Woodman, GoPro founder and CEO, said, "Through this merger, we expect GoPro to grow across the consumer, commercial, and defense markets and to evolve into a U.S. imaging and optics solutions company that addresses national security areas related to cameras, optics, and AI infrastructure."