A robot car from the General Motors Cruise subsidiary is on a test drive.
Andrej Sokolov | photo alliance | Getty Images
DETROIT — General Motors is acquiring SoftBank’s stake in its majority-owned Cruise autonomous vehicle unit for $2.1 billion, the automaker announced Friday afternoon.
SoftBank Vision Fund 1 first acquired a minority stake in Cruise through a $2.25 billion deal in 2018. Its exit comes as the top tech investment firm was set to invest a second tranche $1.35 billion as part of Cruise’s commercial rollout deal. vehicles, which GM will now pay for.
It also follows the abrupt departure of Cruise CEO Dan Ammann from the company in December. Ammann was reportedly fired from Cruise by GM CEO and President Mary Barra, who also chairs Cruise’s board, over disagreements over strategy, including when to take the company public.
GM announced its intention to keep the company public for the foreseeable future. Ammann’s successor, Cruise founder Kyle Vogt, tweeted Friday that an IPO would be a “major distraction, especially right now” as the company expands its new driverless ride service in San Francisco.
SoftBank’s announcement came as GM and Cruise also announced the launch of a “recurring liquidity opportunity program,” in which Cruise employees with vested stock options will be able to sell them. to GM.
“Employees can sell as many vested shares as they want at a fair price determined by a third party,” Vogt said on Twitter. “Or they can hold their stock and expect appreciation over time.”
The program is apparently intended to help retain Cruise employees, who may have been hoping for a windfall from the company’s IPO, which Wall Street was also hoping for.
A GM spokesperson said SoftBank’s exit was unrelated to the employee program. He referred questions about Softbank’s decision to the company. A SoftBank spokesperson declined to comment.
Since SoftBank’s initial investment, much of the hype and investor optimism around self-driving vehicles has crumbled into reality, including GM and Cruise missing out on an initial rollout of self-driving vehicles in San Francisco in 2019. .
The dramatic slowdown in tech stocks since late 2021 is also problematic for SoftBank, which has been one of the biggest investors in pre-IPO companies across the world over the past half-decade. The new deal with GM frees up capital that SoftBank could deploy elsewhere.
SoftBank’s investment division ran into trouble in 2019 after office-sharing company WeWork had to pull its IPO and massively scale back its business to avoid collapse. SoftBank took a multi-billion dollar write-down on WeWork after it rescued the company and took 80% ownership of it.
While SoftBank has rebounded during the pandemic, thanks to a large position in DoorDash, OpenDoor and other companies that made their successful market debuts, the rapid slowdown in high-growth technology stocks this year has again created problems for the Japanese conglomerate.
It is the largest shareholder in South Korean e-commerce site Coupang and Chinese app Didi, both of which are down sharply. With the IPO market closed indefinitely, SoftBank has limited opportunities to obtain liquidity from many of its big dollar bets.