General Motors Co (GM) has bought out the Softbank Vision Fund’s stake in self-driving vehicle start-up Cruise LLC for US$2.1 billion, ending the Japanese investment firm’s involvement in the business and giving the Detroit, Michigan, automaker 80 percent ownership.
GM on Friday said it would invest another US$1.35 billion in Cruise, which makes up for the amount Softbank had pledged to invest in the start-up once the company deploys vehicles in a planned ride-sharing business.
The deal consolidates GM’s ownership and control over Cruise, and reverses a capital diversification plan by former Cruise CEO Dan Ammann, who was fired in December last year after pushing for an initial public offering (IPO).
Photo: Bloomberg
GM CEO Mary Barra and Cruise founder Kyle Vogt, who replaced Ammann as CEO, have said an IPO is not in the offing at this time and would likely not be any time soon.
“Why not just go public? It’s a major distraction, especially right now,” Vogt wrote on Twitter after GM announced the deal. “Cruise just launched a driverless ride hail service in SF [San Francisco], and we want 100 percent of our energy focused on scaling up and delighting our customers.”
For Softbank, the sale marks a nice return on a nearly four-year investment.
The fund initially committed US$2.25 billion for an 11 percent stake in Cruise in May 2018. The first US$900 million was to come at once, with US$1.35 billion payable once vehicles were ready for commercialization.
SoftBank subsequently contributed about US$300 million in additional funding.
When Cruise started offering free rides to the public without a safety driver in late January, it triggered Softbank’s second investment requirement, GM said on its fourth-quarter earnings call.
Softbank did not make the investment, and GM bought out its stake.
The Vision Fund has seen the value of its technology investments plunge by US$25 billion, and the company is heavily in debt.
However, the investment fund sold its Cruise stake for more than double its initial investment.
A Softbank spokesman declined to comment.
Cruise has other partners that own a combined 20 percent stake.
They include Honda Motor Co, which is helping GM develop the Cruise Origin autonomous vehicle, Microsoft Corp, Walmart Inc and T. Rowe Price Group Inc.
In lieu of an IPO, GM also set up a plan to allow Cruise employees to cash out of their stakes.
The automaker launched what it calls the Recurring Liquidity Opportunity (RLO) program, which would pay existing employees for unlisted shares they want to sell at various times throughout the year.
“Public co’s typically have the upper hand vs private co’s when making offers to candidates, since the equity part of an offer is liquid,” Vogt wrote on Twitter. “But being a public co can be a pain. So today we introduced Cruise’s RLO, our solution.”
GM said in its filing that the total equity awards held by employees are worth US$4 billion and that it expects to set aside US$1 billion to US$1.5 billion this year for the employee fund.
Ammann had said in internal memos that Cruise needed an IPO to lure and retain talent.
However, Barra wants to keep Cruise in house — at least until it reaches further milestones with its self-driving technology and develops a business that brings in revenue, people familiar with the matter said in December last year.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
RSS