General Motors Company (NYSE: GM)
GM stock gained more than 11% in the morning trading session on Thursday after the automaker announced $2.25 billion investment in its GM Cruise Holdings unit, from Softbank’s Vision Fund.
The Tokyo-based tech investment company is injecting the funds into the unit to help General Motors to launch self-driving vehicles in 2019.
According to the terms of the deal, the funds will be availed to the automaker in two phases of $900 million now, and $1.35 billion once commercial deployment of the self-driving vehicles is ready.
General Motors is also slated to inject $1.1 billion of its own funds in the Cruise unit once the deal is closed. SoftBank on the hand will own a stake 19.6% in GM Cruise Holdings Unit, raising the value of the unit to $11.5 billion.
General Motors has a market capitalization of $51 billion.
General Motors Chairman and Chief Executive Officer, Mary Barra said, “Our Cruise and GM teams together have made tremendous progress over the last two years.
Teaming up with SoftBank adds an additional strong partner as we pursue our vision of zero crashes, zero emissions and zero congestion.”
The automaker purchased Cruise Holdings unit for $581 million in 2016 after offering it a venture capital fund at a valuation of approximately $90 million. Cruise Holdings said last year that its first autonomous car was ready for production.
The unit also tested 50 self-driving cars accompanied by human drivers in Silicon Valley. General Motors plans to kick start commercial production of the vehicles next year at its Orion, MI plant.
Softbank’s managing partner Michael Ronen issued a statement on the deal saying, “The GM Cruise approach of a fully integrated hardware and software stack gives it a unique competitive advantage.
We are very impressed by the advances made by the Cruise and GM teams, and are thrilled to help them lead a historic transformation of the automobile industry.”
Once the deal goes through, it will be the biggest between an automaker and a technology investment firm aimed at developing autonomous vehicles. SoftBank has been engaging automakers seeking to develop the technology required to create autonomous vehicles.
Last year, it invested over $7 billion in Uber in exchange for a stake of 15% in the ride-hailing startup. –CNBC, Money CNN
General Motors Company Profile
General Motors is involved in the design, manufacture, and sale of automobile parts, trucks, and cars. The firm also offers information technology services, and connected safety, mobility, automotive financing, and security solutions.
Its segments of operation are as follows: GM Financial, GM International, and GM North America.
The company sells cars, crossovers, and trucks to consumer retail dealers, as well as to commercial fleet customers, daily rental car firms, governments, and leasing companies.
Its vehicles are available under the following brands: GMC, OnStar, Chevrolet, Holden, Cadillac, Wuling, Baojun, Maven, Buick, and Jiefang. The company was founded by in 1908 by William C. Durant. It is based in Detroit, Michigan. -Rueters
