GM buys SoftBank Vision Fund’s stake in Cruise for $2.1 billion -Breaking
© Reuters. The facade of General Motors Headquarters in Detroit, Michigan (USA), March 16, 2021 shows the new GM Logo. Picture taken March 16, 2021. REUTERS/Rebecca Cook
David Shepardson & Aishwarya Nasir
WASHINGTON (Reuters), GM announced on Friday that SoftBank Vision Fund will be acquired by General Motors to increase its stake at 80% in Cruise, the self-driving auto subsidiary of American automaker GM.
Detroit-based GM stated that an additional $1.35Billion will be made in Cruise to replace a prior commitment from the SoftBank Vision fund. Softbank (OTC) had invested $900m in Cruise previously. They did not respond immediately to our request for comment.
The equity stake purchase gives GM additional time to focus on self-driving vehicles before potentially launching a Cruise IPO. This could give other investors, including Microsoft (NASDAQ), Walmart (NYSE) and Honda, the opportunity to cash in their Cruise stakes.
GM made an announcement in December about Dan Ammann’s abrupt departure as Cruise’s chief executive. A person briefed on the matter confirmed he was dismissed while another source said he and GM disagreed over when to take Cruise public.
Barra dismissed the necessity of a fast Cruise public offering last month. Barra stated, “There is so much more that could be achieved with a frictionless atmosphere between Cruise and GM.”
The California Public Utilities Commission granted permits for Cruise to allow passenger service with autonomous vehicles and safety drivers in February.
GM and Cruise applied last month to the U.S. regulatory agencies for permission to create and deploy a self driving vehicle that does not require human inputs like brake pedals or steering wheels. Cruise had once planned to launch its commercial robotaxi service before the year ends 2019.
SoftBank committed to invest an additional $1.35 Billion in 2018 when the Cruise cars are ready for commercial deployment. David Whiston of Morningstar Auto Analyst said, “GM gets more ownership in an exciting segment of the GM story.”
Cruise’s CEO Kyle Vogt and co-founder stated in a series tweets that Cruise will allow employees to sell vested stock to GM every quarter to increase financial flexibility.
He said that going public would cause a “major distraction” especially now, and that the company should be focusing on scaling up the driverless San Francisco ride-hail service.
David Caldwell, a GM spokesperson said that the agreement showed GM’s confidence in Cruise and simplified its ownership structure. He claimed that Cruise’s other shareholders included Walmart, Microsoft, and Honda. They also had technology partnerships with Walmart.
Barra stated in a statement that GM was leveraging its strength to capitalize on the chance to invest more in Cruise equity and to advance its integrated autonomous vehicle strategy.
SoftBank’s 2018 pledge to invest $2.25 Billion in Cruise was seen by GM as a confirmation of its leadership in self-driving technology and due to the high price of GM’s first purchase (estimated at $1 billion).
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