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General Motors Co 8-K Report, Material Agreement (May 31, 2018)

Filed May 31, 2018For Securities:GM

Summary

General Motors Co. (GM) announced a significant strategic investment from SoftBank Vision Fund in its autonomous vehicle subsidiary, GM Cruise Holdings LLC. This agreement positions GM Cruise at an $11.5 billion valuation, with SoftBank investing $2.25 billion in total across two tranches. The initial investment of $0.9 billion is for a 10.9% stake, with a subsequent $1.35 billion investment upon commercial deployment of GM Cruise's autonomous vehicles, bringing SoftBank's total stake to 19.6%. This substantial capital infusion underscores the market's confidence in GM's autonomous driving technology and its potential for commercialization. The proceeds will fuel GM Cruise's working capital and general corporate purposes, accelerating the development and deployment of autonomous vehicles for ride-sharing. The deal also includes governance changes, with SoftBank gaining board representation and certain consent rights, reflecting the significant partnership.

Key Highlights

  • 1SoftBank Vision Fund investing $2.25 billion in GM Cruise, valuing the autonomous vehicle unit at $11.5 billion.
  • 2Initial investment of $0.9 billion for a 10.9% stake, with a further $1.35 billion investment contingent on commercial deployment.
  • 3GM contributing $1.1 billion in cash and equity interests in GM Cruise LLC and Strobe, Inc.
  • 4SoftBank will hold a 19.6% stake in GM Cruise on a fully diluted basis after the full investment.
  • 5GM Cruise board composition will include SoftBank's nomination rights for one director and one observer.
  • 6The agreement includes customary governance rights for SoftBank, such as consent rights and tag-along/drag-along provisions.
  • 7A Standstill Agreement was also executed, placing limitations on SoftBank's ability to acquire GM shares or influence management.

Frequently Asked Questions

SoftBank Vision Fund is investing a total of $2.25 billion in GM Cruise. This includes an initial $0.9 billion investment and a subsequent $1.35 billion investment upon the commercial deployment of GM Cruise's autonomous vehicles.

The transaction values GM Cruise at $11.5 billion on a fully diluted basis after SoftBank's full investment.

GM, through its subsidiary Holdings, will invest $1.1 billion in cash and contribute its equity interests in GM Cruise LLC and Strobe, Inc. to GM Cruise.

Yes, SoftBank will have the right to nominate one director and one observer to the GM Cruise board of directors, subject to regulatory approval, as long as they maintain a certain ownership threshold. They will also have customary consent rights.

Yes, a Standstill Agreement has been put in place, which includes customary limitations on SoftBank and its affiliates from acquiring GM shares, soliciting proxies, or influencing the management or control of General Motors.