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Tuesday 27 September 2016
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Did GM Try To Buy Lyft?  Both Sides Mum

Did GM Try To Buy Lyft?  Both Sides Mum

General Motors and Lyft are declining to comment on a report from The Information, a Silicon Valley website, that is reporting that Lyft rebuffed an offer from GM to buy all of the ride-sharing company, of which it owns 9%.

The site attributes the report to a “person briefed on the situation,” but did not cite an offering price or any other terms.

Last year Lyft, founded in 2012 by John Zimmer and Logan Green, hired Qatalyst Partners, a Silicon Valley investment banking firm, to find a prospective buyer. The Information reports that the ride-sharing company has decided to seek another round of funding from venture capital firms and other investors.

The privately held company was valued at about $5.5 billion when GM bought its stake. GM President Dan Ammann joined Lyft’s board of directors as a condition of the investment.

Lyft is a distant second to Uber in terms of its share of the growing U.S. ride-sharing market, and Uber is dwarfed globally by Didi Chuxing.

Venture capital firms and corporate investors have put about $28 billion into various ride-sharing businesses in recent years. The primary players have been Uber, Lyft, and China’s Didi Chuxing, which earlier this month said it will buy Uber’s China business.

Automakers are positioning themselves as partners or investors in these so-called “new mobility” companies in order to prevent them from eventually subtracting from new vehicle sales.

In May, Toyota announced a vague agreement with Uber.

Volkswagen invested $300 million into European ride-sharing start-up Gett. BMW’s i Ventures provided $5 million of seed capital for Scoop, a ride-sharing platform operating in the San Francisco Bay area.

GM is leasing select models to Lyft drivers in Chicago, Boston, Washington, D.C., and Baltimore. Soon the program will expand to San Francisco, Los Angeles and Denver.

About 15 million Americans will use a ride-sharing service this year, a figure projected to grow to more than 20 million by 2020, according to eMarketer.com, a research website that studies the sharing economy.

None of these new ventures, including Uber, is profitable, but investors are betting that as they grow they will begin to make money some day.