General Motor Corporation (NYSE:GM) announced late Friday, a move that only goes to underline the seriousness with which the company is pursuing its electrification ambition.
What Happened: GM said it is buying out Japanese investment management firm SoftBank Group Corp. (OTC:SFTBY)-owned fund's equity stake in it Cruise self-driving unit. GM is paying SoftBank $2.1 billion for the transaction.
The Detroit-based automaker also said it is planning to infuse an incremental $1.35 billion into Cruise.
"We are extremely pleased to announce GM is leveraging the strength of its balance sheet to capitalize on the opportunity to increase its equity investment in Cruise and advance our integrated autonomous vehicle strategy," said GM Chair and CEO Mary Barra. "We continue to believe our investment represents an extraordinary opportunity for creating long-term shareholder value."
GM also noted that Cruise launched its "Recurring Liquidity Opportunity Program," which provides employees the potential for long-term share price upside as well as flexibility around share liquidity. This program, the company said, will keep Cruise extremely competitive in the talent market, as it enters the early commercialization phase and continues to attract and retain some of the world's best talent.
Why It's Important: Cruise is focusing on commercial autonomous ride-sharing and delivery. The unit recently began offering fully driverless rides to the public in a major U.S. city, GM noted.
The unit's Cruise Origin is a zero emission, shared vehicle designed to operate without a human driver.
GM said its decision to hike its stake in Cruise will simplify the latter's shareholder structure and provide flexibility to pursue the "most value-accretive" path to commercializing and unlocking the full potential of AV technology.
GM closed Friday's session up 2.66% at $44.82.
Related Link: These Automakers Have Vowed to Catch Up With Tesla And Wrest EV Leadership: Is That A Stretch Goal?
Photo: Courtesy of getcruise.com
