The automaker should be happy the deal didn't go through.
Earlier in the year GM announced a massive investment of $500 million in Lyft, gaining a 9 percent stake in the ridesharing company. But now The Information is saying that the General wanted much more than just shares and a seat on the company's board: It wanted to buy Lyft outright. It's not known which side started the conversation about an acquisition or how much GM was willing to pay. Anonymous sources simply said was that the talks happened a few weeks ago but Lyft decided against the move, raising a new round of funding instead.
You might think a company like Lyft would be crazy to turn down an acquisition offer from GM. But that's actually the Silicon Valley way. Many well-known startups have told would-be buyers to take a hike. Not too long ago Snapchat told Mark Zuckerberg and his $3 billion dollars thanks but no thanks. This news is more interesting when viewed from Detroit as opposed to Silicon Valley. A lot of automakers have invested in ridesharing but so far this is the first story about one carmaker who was ready to actually enter the market directly as a player and not just an invested observer. If you ask us, GM is probably better off for being spurned by Lyft. Uber is still the top dog in the ridesharing industry.
Had the automaker acquired Lyft it would have needed to pump millions into the company just to continue to compete. An almost 10 percent stake for $500 million is a pretty good deal, especially since it allows GM to cut and run without a huge loss ($500 million is nothing to the General) should Uber eventually take over the industry entirely. If Lyft surges ahead, or even closes the gap a bit, with help from Detroit then that $500 million could look like the best money ever spent. If you ask us the first move should be making more of those undercover celebrity driving videos. That would truly be spending GM's money wisely.