GM paid less for Cruise Automation than was reported

http://www.businessinsider.com/gm-cruise-automation-price-2016-7

by argonaut • 10 years ago

47 21 10 years ago

businessinsider.com

Animats2• 10 years ago

Still, $581 million is a lot for a technology inferior to what GM already had through their Cadillac/CMU deal.[1]

[1] https://www.washingtonpost.com/local/trafficandcommuting/dri...

jayjay713• 10 years ago

I am still amazed that GM managed to lose that IP to Delphi. It was amazing tech (I worked on it).

Animats2• 10 years ago

Me too. Delphi (which used to be part of GM) is now using Audis. San Francisco to New York via LA and Washington, 99% on automatic.[1] That's way ahead of Cruise. How did GM screw that up? Delphi used to be part of GM, and is still a major supplier. The latest from Cruise is them hitting a parked car at 20MPH on 7th St. in SF.[2]

[1] http://delphi.com/delphi-drive [2] https://www.dmv.ca.gov/portal/wcm/connect/bc21ef62-6e7c-4049...

dpiers• 10 years ago

The number listed does not include the golden handcuffs/employee retention bonuses. Given that this was an acquihire, an additional $400MM in bonuses paid out over the next few years is plausible. Especially given that unvested employee grants are included in the non-disclosed employee retention side of the arrangement.

argonaut3• 10 years ago

I don't think it's plausible. Sure, it is common for the majority of payouts in acquihires that are in the $1M-$50M range to be through handcuffs. When a company is acquired for $600M, that is not an acquihire, and I would be very surprised if retention payments for such a small number of employees totaled $400M.

I would be happy to be corrected, if someone has heard of situations where small acquired companies had such large golden handcuffs.

theoracle1013• 10 years ago

From an accounting standpoint yes, but in reality they paid about $1B. Half was directly for the company, the other half was golden handcuffs. They are choosing to allocate the second to operating expenses and not acquisitions. To the employees of Cruise, still feels like a sweet billion. For once investors got less and employees got more, which is a refreshing change

argonaut3• 10 years ago

Do you have inside knowledge we're unaware of? Otherwise it's hard to say "in reality...." $1B is plausible, but much more questionable given this article.

mikeyouse• 10 years ago

Dan Primack wrote a clarifying article yesterday: https://www.google.com/amp/amp.timeinc.net/fortune/2016/07/2...

The key part:

because GM GM is being very narrow in how it describes the deal value. The $581 million (or $600 million, whichever you prefer) is the cash and stock that actually went out the Detroit doors during GM’s second fiscal quarter. Not included were a variety of other things, including cash still being held in escrow, expected earn-out payments, employee retention packages and other expected employee compensation (particularly for those with unvested shares at the time of acquisition).

ttam• 10 years ago

Justin Kan [x], who's brother Dan is the co-founder that's unnamed in the picture of the BI article, snapchatted several times the Cruise deal being $1B / unicorn

I consider this article to be pretty poor, if they wanted to actually find the real price, they could've investigated some more instead of trying to infer from the earnings' reports.

[x] I believe he was also an investor in Cruise

theoracle1013• 10 years ago

In reality was a reference to the difference between why an acquisition price is reported as so high in the press yet appears on the financial statements as much less. This isn't unique to Cruise. Not a slight at this article.

abannin• 10 years ago

Surely $500M of retention incentives would be considered 'material' and require disclosure

Aelinsaar• 10 years ago

It would also be a lunatic number for this deal.

sulam• 10 years ago

I think it's hilarious that the main thrust of this article is that "omg, there might be a unicorn we hadn't heard of!!!" As if a company undergoes some significant change when its paper valuation passes $1B. Honestly, $600M or $1000M, for a tiny company is a great exit, and having or not having a silly mythical creature label doesn't affect that.

avs733• 10 years ago

don't question the narratives. The narratives must be respected. The narratives protect us. The narratives know what is best for us. The narratives love us.

malz• 10 years ago

The media unquestioningly reported the $1 billion number. This article at least admits "it's unclear where that $1 billion figure came from", but where's the shame about being manipulated into reporting completely made-up numbers?

rmason• 10 years ago

Related side note:

George Hotz from Comma.ai was interviewed by Jason Calacanis for this week in startups and he trashed the Cruise Automation deal. He said they were too secretive and hinted they did not have very good technology.

http://thisweekinstartups.com/george-hotz-commaai/

theoracle1013• 10 years ago

How can he claim they have poor tech & be secretive at the same time?

Within SDC circle, Hotz's company so far has shown some pretty poor demos. Really poor. I guess the salesmanship will him raise more $$ but its founded in anything but reality

GM paid less for Cruise Automation than was reported

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