Lyft co-founders Logan Green (left) and John Zimmer (right) with GM president and Lyft board member Dan Ammann (center) earlier this year. Image source: General Motors. 

General Motors (GM -0.15%) told Lyft earlier this year that it was willing to pay nearly $6 billion to buy the ride-hailing start-up outright, according to a new report. While the Detroit giant has plenty of cash available, GM isn't in the habit of making $6 billion acquisitions, to say the least. What's the story here and what might GM have been thinking?

What we know about GM's interest in acquiring Lyft

Citing unnamed sources close to the deal, influential Silicon Valley news site The Information reported that a GM official "verbally indicated" that the automaker might pay $4.5 billion for Lyft, plus an amount equal to Lyft's cash on hand. It's thought that Lyft has about $1.4 billion in cash.

That expression of interest was relayed to Lyft's board of directors as a potential "$6 billion deal," according to the report. (GM president Dan Ammann sits on Lyft's board; it's very likely that the expression of interest was from him.) 

Lyft's co-founders apparently convinced the board that $6 billion wasn't enough. The co-founders, CEO Logan Green and Lyft president John Zimmer, reportedly told the board that they thought Lyft would be worth $12 billion by 2017 and suggested that a $9 billion offer might be reasonable. 

Lyft then hired Qatalist Partners, a boutique investment bank known for helping technology companies find buyers, to see if other potential acquirers had interest. But none made an offer in the range that Lyft was seeking. 

Why would GM want to buy Lyft? 

GM already has a 9% stake in Lyft, purchased back in January for $500 million. GM CEO Mary Barra recently said that the Lyft-GM alliance is "exceeding our expectations," pointing to the early success of a program that allows Lyft drivers to rent GM vehicles at affordable weekly rates. GM and Lyft are also working toward an upcoming pilot program in which Lyft will offer rides in electric Chevrolet Bolts equipped with GM's prototype self-driving technology. 

Given that GM already has a significant equity stake in Lyft, and apparently a very strong working relationship, why would it want to buy Lyft outright? After all, Lyft is currently spending big to keep pace with archrival Uber; it's likely that a $6 billion purchase price would be just the beginning of what GM would have to invest to turn Lyft into a sustainably profitable business.

That may be even harder than it sounds. Some analysts have expressed concern that companies like Lyft will struggle to generate profits as the ride-hailing industry drives costs down to attract business. Lyft also may face risk from the fact that it doesn't have its own self-driving technology, believed to be key to the long-term success of the ride-hailing business model. 

GM's electric Chevrolet Bolt was designed with ride-hailing service in mind. Self-driving versions, like this one spotted testing in San Francisco, will soon haul Lyft customers in a pilot program in a U.S. city. Image source: General Motors. 

Of course, GM has self-driving technology -- and a management team that is determined to position the old Detroit giant as a leader in the new technology-driven world of "personal mobility." It's possible that Ammann's position on Lyft's board has shown him how Lyft could be a profitable long-term business if it were incorporated into GM. 

It's also possible that GM, aware that Lyft can and might choose to work with other automakers, decided that it might like to have Lyft to itself if the price were right. 

The upshot: This would be a huge deal for GM, but not an impossible one

Spending $6 billion (or likely more) to buy Lyft would be a very big deal for GM. But it's not an impossible one: GM has roughly $20 billion in cash on hand, and it could well offer to pay all or part of the purchase price with newly issued GM stock, as it did in its deal to buy Cruise Automation. 

Long story short: GM could afford the deal if it made sense, and Barra and Ammann (who are normally very careful with shareholders' money) apparently saw something that made an acquisition make sense at a certain price. What? That we don't know.  

The track record of GM's current leadership team has earned them the benefit of the doubt. But from this GM shareholder's perspective, this is still a puzzling story.