Good morning, Term Sheet readers.
It had been a little while since SoftBank pumped an absurd amount of money into a company. But today, Masayoshi Son’s Vision Fund said it plans to invest $2.25 billion into GM’s self-driving car unit Cruise to help bring fleets of autonomous vehicles to market faster.
Cruise will remain a GM unit, but SoftBank will own 19.6% of the company. As part of the deal, GM will also invest $1.1 billion into Cruise.
The GM and SoftBank Vision Fund investments are expected to provide the capital needed to commercialize a fleet of a self-driving, ride-hailing service beginning in 2019.
The investment will be made in two parts. The first tranche of $900 million will be made at the closing of the transaction. Once Cruise’s autonomous vehicles are ready for commercial deployment, Softbank will complete the second investment of $1.35 billion. Softbank and GM Cruise have agreed to a 7-year term before either party can seek liquidity outside of the partnership.
Let’s not forget that SoftBank’s investments include major ride-hailing companies such as Uber, Didi Chuxing, Grab, Ola, and 99. All of these relationships are getting tangled, and I’m having a hard time keeping them separate. Remember that GM invested $500 million in Lyft in early 2016 and owns about 9% of the company?
Who cares which company will win the ride-hailing / autonomous vehicle arms race? SoftBank certainly doesn’t. When you’ve made a bet on an entire ecosystem, you’re bound to emerge victorious.
….SPEAKING OF RIDE-HAILING, here’s an interesting tidbit: Warren Buffett offered to invest $3 billion in Uber, but the two sides couldn’t agree on the terms. Bloomberg reports that Berkshire Hathaway would have provided a convertible loan to Uber that would have protected Buffett’s investment should Uber hit financial straits, while providing significant upside if Uber continued to grow in value.
If this sounds familiar, that’s because it is.
Buffett had proposed similar terms to Goldman Sachs during the financial crisis. He invested $5 billion after the collapse of its rival Lehman Brothers in late 2008. In exchange, Buffett’s company got preferred stock that resulted in more than $1.6 billion in profit.
Bloomberg writes, “Buffett would have effectively lent Uber his sterling reputation, along with some capital, in exchange for cushy deal terms.” But talks died when Uber CEO Dara Khosrowshahi tried to decrease the size of the deal down to $2 billion, and the two parties could not come to consensus on the terms.
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HEALTH AND LIFE SCIENCES DEALS
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PRIVATE EQUITY DEALS
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