As Lyft Inc cruises toward an initial public offering in March, one of the big winners is going to be General Motors, whose stake in the ride-hailing firm could cost as much as $1.27 billion.
GM is not discussing about its plans for that investment, and investors surveyed by Reuters, owning a collective 35.7 million shares, do not have a consensus view.
Some believe the automaker should hold on to it for strategic reasons, whereas others want the money returned to shareholders through buybacks or a special dividend.
“Unless GM can leverage its investment in Lyft to accelerate its own robo-taxi ambitions with Cruise, we believe it would be correct to cash out its stake to repurchase its own under-valued shares,” stated Michael Razewski, a partner with Douglas C. Lane & Associates, that owned about 2.6 million GM shares at the end of last year.
Cruise Automation is General Motors’s self-driving car unit.
Lyft on Monday introduced the investor “roadshow” for the March 29 IPO, and it stated it to sell Class A shares at $62 to $68 a share.
GM owns over 18.6 million Class A shares, as per the Lyft filing, meaning its investment at the outset could be cost $1.16 billion to $1.27 billion. GM invested $500 million in Lyft in January 2016.
With a 180-day lock-up period during which the automaker cannot sell and the expected April IPO of larger competitor Uber Technologies Inc further stoking interest in the ride-hailing sector, the value could subsequently increase.
GM spokesman Tom Henderson stated the automaker is happy with its Lyft stake but refused to talk about future plans for the shares. Lyft spokeswoman Alexandra LaManna had nothing to say.