8-KMaterial AgreementsOther Events

General Motors Co 8-K Report, Material Agreement (Oct 3, 2018)

Filed October 3, 2018For Securities:GM

Summary

General Motors Company (GM) announced a significant strategic investment by Honda Motor Co., Ltd. into its autonomous vehicle subsidiary, GM Cruise Holdings LLC. Honda will acquire a 5.7% equity stake in GM Cruise for $750 million in cash. This investment underscores the growing importance of autonomous driving technology and GM's commitment to advancing its development. The proceeds will bolster GM Cruise's working capital and general corporate purposes, positioning it for continued innovation and deployment. In addition to the equity investment, Honda will contribute approximately $2 billion, largely through a long-term annual fee to GM Cruise, and will share development costs for certain components of a new shared autonomous vehicle. This collaboration signifies a substantial partnership aimed at accelerating the development and deployment of autonomous vehicle technology. Honda will gain rights to appoint a board observer and a minority consent right concerning specific amendments to the operating agreement, reflecting their significant stake and strategic interest.

Key Highlights

  • 1Honda Motor Co., Ltd. invested $750 million in cash for a 5.7% equity stake in GM Cruise Holdings LLC.
  • 2The investment by Honda aims to accelerate the development and deployment of autonomous vehicle technology.
  • 3Proceeds from the investment will be used by GM Cruise for working capital and general corporate purposes.
  • 4Honda will contribute an additional approximately $2 billion, primarily through a long-term annual fee and shared development costs.
  • 5Honda gains the right to appoint a board observer to GM Cruise and a minority consent right on specific material adverse changes to its share class.
  • 6The agreements include customary provisions for tag-along, drag-along, preemptive, and registration rights.
  • 7Transfer restrictions for Honda's stake are in place, with a right of first refusal for GM/Holdings upon certain triggers.

Frequently Asked Questions

Honda's investment is a significant endorsement of GM Cruise's technology and potential. It provides substantial capital to accelerate the development and deployment of autonomous vehicle (AV) technology and signals a strategic partnership that could leverage both companies' expertise in the rapidly evolving AV and mobility services market.

The $750 million cash investment from Honda will be utilized by GM Cruise for its working capital and general corporate purposes. This funding is critical for ongoing research, development, testing, and operational expansion of its autonomous driving technology and services.

Beyond the $750 million equity stake, Honda is making a substantial commitment of approximately $2 billion. This contribution is structured primarily as a long-term annual fee to GM Cruise, along with shared development costs for components of a new shared autonomous vehicle, further solidifying the strategic alliance.

Honda will have the right to appoint one observer to the GM Cruise board, subject to regulatory approval and continued ownership of its shares. Additionally, it secures a minority consent right for amendments to the operating agreement that would have a material and disproportionate adverse effect on its Class E Common Shares, provided certain conditions are met.