Lyft Inc. (NASDAQ: LYFT) said on Monday it will sell Level 5 to Toyota Motor Corp for £395.78 million – a move that will help it hit its profitability target sooner than expected. In early February, the San Francisco-based company reported a narrower-than-expected per-share loss in the prior quarter (Q4).
Lyft shares were reported a little under 2% up in after-hours trading on Monday. Including the price action, the stock is now exchanging hands at £46.21 per share. In comparison, it had started the year at £34 per share after recovering from £15.31 per share in March 2020 when the COVID-19 restrictions were at their peak.
The deal is likely to close in Q3
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Selling Level 5 to Woven Planet division of Japan’s Toyota Motor will open new doors for Lyft to collaborate with companies focused on self-driving technology instead of facing the cost of developing this technology by itself.
As per the agreement between the two companies, Toyota will pay £143.92 million to Lyft upfront in cash. The ride-hailing company will receive the remaining £251.86 million by 2026. Both companies expressed confidence on Monday that the deal will close in Q3.
In separate news from the United States, NXP Semiconductors published market-beating quarterly results on Monday.
Lyft refrained from divulging how it intends to use the proceeds from the sale but expressed confidence that assuming no major hit due to the COVID-19 crisis in the upcoming months, it is now on track to report a profit on an adjusted basis in the third quarter. The novel flu-like virus has so far infected more than 32 million people in the U.S. and caused over half a million deaths.
Woven Planet to take over Level 5’s workforce
Following the acquisition, Woven Planet will take over the entire Level 5 workforce comprising over 300 employees. Toyota had set up this division in January to expand its footprint in autonomous and semi-autonomous driving technology and to develop connected vehicles.
According to Lyft, it now plans on partnering with companies that require maintenance or management for their autonomous vehicle fleets. It will also offer services, including cleaning and consumer interface to such partners, resulting in added revenue.
Lyft performed fairly upbeat in the stock market last year with an annual gain of close to 15%. At the time of writing, the company that operated in the U.S and Canada is valued at £14.92 billion.