General Motors Co announced on Friday afternoon that it had acquired SoftBank’s equity ownership stake in Cruise autonomous vehicle unit for $1.2 billion. GM’s move sought to end the Japanese investment company’s involvement in the business as it took 80% ownership.
The recent acquisition enables GM to have a stake in a growing future, that of autonomous vehicles and simplified driving experiences.
Softbank Vision Fund 1
SoftBank Vision Fund 1 first entered into a minority acquisition deal valued at $2.25 billion in 2018. Its exit comes only months after the prominent tech investment firm had announced its plans to invest another tranche of $1.35 billion as part of the original agreement, which GM will now pay. Remember, SoftBank had pledged to release the second round of cash once Cruise deploys automobiles in the ride-sharing business, something it is ready to implement.
The acquisition deal is meant to consolidate General Motor’s shareholding capacity and control over the operations of Cruise as it reverses the capital diversification mechanisms adopted by Dan Ammann, former CEO who was fired in December following his endless efforts to push for the startup’s initial public offering.
GM To Obtain More Cruise Equity
GM’s move to purchase the equity stake in Cruise gives it more time to improve itself-driving vehicles before initiating the plans to launch a Cruise IPO that will give room for other investors like Honda, Walmart, and Microsoft to cash in their stakes in the startup.
Last month, GM’s CEO and Chair, Mary Barr downplayed the demand for initiating a hasty public offering at Cruise revealing that there was still so much to be accomplished by the two firms in a frictionless environment.
Cruise Makes More Progress
The California Public Utilities Commission had issued Cruise with permits that allowed the startup to roll out passenger service in autonomous vehicles in February. However, the Commission required the presence of safety drivers.
Similarly, Cruise collaborated with GM in February to petition U.S regulators for permission to start building and deploying self-driving automobiles without installing human control systems like brake pedals or steering wheels. The startup had once shown interest in starting commercial robot-taxi operations in 2019.
CEO and co-founder of Cruise, Kyle Vogt hinted in a series of tweets on Friday that the startup would start allowing its employees to sell as many vested shares as they desire at a fair price to be determined by a third party. Vogt further revealed that Cruise’s employees could also consider holding onto their shares while hoping for appreciation over time.