Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Exclusive: U.S. panel okays SoftBank's $2.25 billion investment in GM-linked self-driving firm

Stock MarketsJul 06, 2019 12:17AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: People walk near the logo of SoftBank Corp in Tokyo

By Alexandra Alper and Greg Roumeliotis

(Reuters) - Cruise, a U.S. self-driving vehicle company majority-owned by General Motors Co (NYSE:GM), told Reuters on Friday that a U.S. national security panel approved a $2.25 billion investment in the firm by Japan's SoftBank Corp.

SoftBank has come under increasing U.S. scrutiny over its ties to Chinese firms in the face of an escalating trade and technology war between Washington and Beijing. It is in the process of raising its second $100 billion investment vehicle, dubbed Vision Fund, after deploying its first one of equal size.

The Committee on Foreign Investment in the United States (CFIUS), which reviews deals for potential national security concerns, approved the investment based on fresh assurances that Cruise's technology would be completely off limits to SoftBank, a source familiar with the matter said.

A SoftBank spokesman declined to comment. The Treasury Department, which leads CFIUS, did not respond immediately to a request for comment.

The approval unlocks a seat for SoftBank on Cruise's board, formalizing its oversight, and cements key financing for Cruise, which has raised $7.25 billion in capital since last year, the company said.

"Today's news is another important step toward achieving our goal to develop and deploy self-driving vehicles at massive scale," Cruise CEO Dan Ammann said in a statement to Reuters.

However, approval for the deal did not always appear certain as CFIUS scrutinized it closely, according to two people close to the deal.

The $2.25 billion investment was unveiled by SoftBank in May 2018 amid a wave of investments by the Japanese technology and telecommunications conglomerate in artificial intelligence, data analytics, financial services and self-driving cars.

RED FLAGS

The investment raised red flags with CFIUS because SoftBank invests in numerous mobility units, some based in China, and encourages companies it invests in to share information.

CFIUS was especially concerned about SoftBank's co-investments with Tencent Holdings Ltd, a Chinese social media and gaming giant, and its investment in China ride-hailing firm Didi, which it fears could take technology from Cruise, sources said.

The committee, emboldened by a law last year aimed at strengthening the inter-agency panel, has flexed its muscles increasingly against Chinese companies as Beijing and Washington remain locked in a heated trade and technology row.

Reuters reported that Chinese gaming company Beijing Kunlun Tech Co Ltd has been seeking to sell Grindr LLC, the popular gay dating app, after CFIUS said its ownership posed a national security risk. CFIUS halted a plan last year by Ant Financial, owned by the chairman of China's internet conglomerate Alibaba (NYSE:BABA), to acquire MoneyGram International Inc.

The Cruise deal was structured to allow $900 million of the investment to be disbursed initially, with the remainder provided once Cruise AVs are ready for commercial deployment and contingent on regulatory approval. The two tranches would combine to give SoftBank a nearly 20 percent stake in Cruise.

However, the Japanese firm separately announced a joint investment with GM, T. Rowe Price, and Honda of $1.15 billion earlier this year, further boosting its stake.

Softbank's investment, followed by Honda's announcement in October that it will pour $2.75 billion into Cruise, is still one of the biggest and most high-profile investments in self-driving technology to date.

Its Vision Fund, the world's largest technology fund, unveiled a $1.5 billion investment in China's top used car platform, Chehauduo Group, in February. Reuters reported in December that the same fund was hiring an investment team based in China to boost its presence in one of the world's most vibrant tech markets.

It is not the first time SoftBank has gone through a protracted CFIUS review. It has had to accept U.S. restrictions on how it runs some of its companies, including wireless carrier Sprint Corp and investment firm Fortress Investment Group.

SoftBank lost its claim to two seats on the board of Uber (NYSE:UBER) Inc when the ride-hailing giant floated in the stock market in May. SoftBank never received permission for the board seats from CFIUS following an agreement in 2017 to invest $9 billion in Uber.

The autonomous vehicle industry could revolutionize transportation but faces engineering, safety and regulatory challenges, as well as skepticism among potential users.

GM Cruise and Alphabet (NASDAQ:GOOGL) Inc's Waymo are often described as leading the pack of technology and auto companies competing to create self-driving cars and integrate them into ride services fleets.

(Additional Reporting by David Shepardson; Editing by Cynthia Osterman, Paul Tait & Shri Navaratnam)

Exclusive: U.S. panel okays SoftBank's $2.25 billion investment in GM-linked self-driving firm
 

Related Articles

Honda posts 4.2% rise in full-year operating profit
Honda posts 4.2% rise in full-year operating profit By Reuters - May 14, 2021

TOKYO (Reuters) - Honda Motor Co on Friday posted a 4.2 % increase in annual operating profit, with car sales recovering from the impact of the COVID-19 pandemic. Japan's No.2...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Bagger Vance
Bagger Vance Jul 05, 2019 9:46PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I would never use this bank as it appears to support sadistic sexuality such as the neo *****lgbqt...HULU among others is even rethinking their whole strategy
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email