How Much Did General Motors Really Pay for Cruise Automation?

GM president Dan Ammann (right) with Cruise Automation co-founders Daniel Kan and Kyle Vogt. Image source: General Motors.

Back in March, General Motors (NYSE: GM) announced its intent to purchase Cruise Automation, a small San Francisco-based start-up that had developed some self-driving technology and expertise that GM wanted.At the time, reports citing unidentified sources said that GM would pay about $1 billion for Cruise.

That seemed like a steepprice for a start-up with only about 40 employees. But was it reallythat much?

It turns out that it wasn't, The transaction was completed in May, and GM disclosed some of the details during its second-quarter earrings report and in a recent filing with the Securities and Exchange Commission (SEC).Using these reports, we can figure out exactly how much GM paid -- and I did.

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What GM said about its purchase of Cruise Automation

Here's what GM CFO Chuck Stevens said about the purchase price during the company's second-quarter earnings call:

So, "approximately $600 million," plus some additional costs. But how much?

As is often the case, the company's SEC filings provide the missing detail. In this case, we can look to the Form 10-Q that GM filed on July 21, after its earnings report. Here's what it said:

Later in the 10-Q, we learn more:

We need one more piece of information: GM's shares closed at $31.18 on May 12.

This is what GM paid for Cruise Automation

Now we can calculate the full purchase price:GM paid $291 million in cash at the deal's closing, along with9,314,527 shares of GM stock valued at $31.18, worth $290,426,951.86.On top of that, it issued 3,419,028 shares of GM stock to some Cruise employees as an incentive to stay and work for GM for awhile. Those shares will vest over time. At $31.18 each, they're worth $106,605,293.04.

Add it up, and GM paid a total of $688,032,244.90 for Cruise Automation.

Note: Its impact on GM's cash was much less

Here's the thing, though. All of those GM shares were newly issued. GM didn't have to buy them, it just had to issue them. GM's cash commitment to the deal was $291 million.

Long story short: GM spent $291 million in cash, and issued some new shares of its stock. The owners of Cruise received just over $581.4 million (in cash and GM stock) at closing. Some of Cruise's former employees -- some of whom were probably also Cruise shareholders -- will receive an additional aggregate total of $106.6 million in GM stock if they each meet the requirements to fully vest.

No matter how you add it up, it wasn't a billion dollars.

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John Rosevear owns shares of General Motors. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.