General Motors, NYSE:), announced last week that it had acquired SoftBanks’ equity stake in GM Cruise. The acquisition cost $2.1 billion. GM will also invest $1.35 Billion in Cruise, instead of SoftBank.

GM currently owns around 80%, and SoftBank no longer holds a stake. Cruise’s transaction value is around $30 billion. It’s lower than its $30 billion last funding.

T. Rowe Price (NASDAQ;), Honda (NASDAQ.), Microsoft (NASDAQ.), and Walmart are the other 20%.

Three analysts discuss GM’s decision to expand its share in autonomous vehicles (AV).

Wolfes Rod Lache, Outperform, $70: GMs options to retain control over Cruise and its exclusivity were limited. GM reset the table by buying out Softbanks stake, which will ultimately raise GMs stake in Cruise to >80%. Also, we are increasing our GM target from $67 to $70.

Credit Suisses Dan Levy ($75, Outperform): The valuation of Cruise was disappointing. Some might also worry about Cruise’s diminished independence. However, our focus is on the positives. This deal further ties Cruise and GM creating a strong case for operational synergies. The tendering program + removal of IPO/liquidity vesting condition can help in talent attraction/retention. Investors are likely to discount AV valuations in GM stock. We still believe that a stronger connection to Cruise will eventually lead to a significant long-term increase in value.

Wells Fargos Colin Langan (Overweight $83): SoftBank wants to sell assets in order to increase its credit score. GM was the best logical buyer and had enough money to complete the transaction in a short time. However, this transaction shows that a Cruise IPO may not be imminent. Moreover, Cruise’s low valuation may raise questions about whether it is worth $30 billion as implied by its prior funding round. Cruise’s market price is expected to be somewhere in between these two figures. Because investors are less interested in growth, it is probable that the $30B number will be lower. SoftBank probably accepted a discount in order to quickly liquidate its positions. Although GM shares traded slightly higher after the announcement, the stock could still trade slightly lower due to the low price of Cruise.

By Senad Karaahmetovic