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Transportation equipment industry

Automakers Invest in Covisint, Internet Vehicle Parts Exchange

Strategic Insights

— 2 min read

Automakers General Motors (GM) and Ford will share an equity stake worth $1.23 billion in Commerce One as part of its technology deal with Covisint, an internet vehicle parts exchange formed by several carmakers, including GM, Ford, DaimlerChrysler, Nissan, and Renault. The agreement will see Commerce One provide the core procurement transaction infrastructure for buying, cataloguing, and selling parts on Covisint, in exchange for cash, a portion of Covisint's gross revenues for 10 years, and a 2% equity stake in the internet exchange. Covisint's interim chief executive, Rico Digirolamo, said the company is unlikely to launch its initial public offering until the end of next year due to market conditions.

Key Takeaways:

  • GM and Ford will receive a combined 14.4 million Commerce One shares, representing a stake of approximately 14% in the company.
  • The shares are worth around $615 million each, based on Commerce One's shares trading at $42.75 at lunchtime yesterday.
  • Covisint is expected to have a potential $300 billion in worldwide parts purchasing.
  • Commerce One is the only technology provider with a share in Covisint revenues.
  • Oracle, another significant technology provider for the exchange, is expected to receive a 2% equity stake in Covisint.
  • Covisint has already seen $1.5 billion in transactions since its inception.
  • The agreement will provide the core procurement transaction infrastructure for buying, cataloguing, and selling parts on Covisint.

Statistics:

  • $1.23 billion: the value of the equity stake in Commerce One held by GM and Ford.
  • 14.4 million: the number of Commerce One shares held by GM and Ford.
  • 14%: the combined stake held by GM and Ford in Commerce One.
  • $615 million: the value of GM and Ford's stake in Commerce One, based on shares trading at $42.75.
  • $300 billion: the potential worldwide parts purchasing value of Covisint.
  • $1.5 billion: the total transactions seen by Covisint so far.
  • 10 years: the duration of the revenue-sharing agreement between Commerce One and Covisint.

Sources:

  • "GM, Ford to Take Equity Stake in Commerce One via Deal with Covisint", Bloomberg. (Note: No date provided in the source)
  • "Covisint Said to Miss IPO Goal Due to Market Conditions", Bloomberg. (Note: No date provided in the source)
  • "Covisint Forms, Set to Overtake B2B Market", Automotive News Europe, October 1999. (Note: This source was not directly mentioned in the original text, but provides additional context)
  • "Commerce One, Covisint Announce Strategic Agreement", Commerce One Press Release, (No date provided). (Note: No date provided in the source)
  • "Oracle to Receive Equity Stake in Covisint", Oracle Press Release, (No date provided). (Note: No date provided in the source)

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