Kerkorian raise Ford stake again
09 May 2008
Billionaire investor Kerkor "Kirk" Kerkorian certainly believes in putting his money where his mouth his.
After publicly declaring his support for Ford Motors and its CEO Alan Mulally, he made a public offer for 20 million of its shares at $8.50 per share, a premium of 13 per cent at the prevailing price then. (See: Billionaire Kerkorian to increase stake in Ford; offers premium for 20 million shares)
This was above the 100 million shares that he had already acquired in April through his investment vehicle Tracinda Corporation. After the conclusion of this offer, scheduled to end by 9th June, he will own as much as 5.6 per cent of the company.
Now, Kerkorian has said that he is not averse to increasing his stake further in Ford Motors.
The offer, announced in a Wall Street Journal advertisement today, reiterates that Kerkorian's Tracinda Corporation will pay $8.50 for each of 20 million additional shares.
The wording of the advertisement was Tracinda may ''from time to time, propose business strategies and, subsequent to the expiration of the Offer, acquire additional shares.''
This clearly shows the billionaire's intention to acquire more of the company that is on the verge of a turnaround in its fortunes.
Kerkorian and his adviser Jerry York have cited the purchase as an endorsement of Mulally's efforts to restore Ford to profit following a combined $15.3 billion of losses in 2006 and 2007. Recently, the company surprised analysts by showing a quarterly profit of $100 million when other American auto majors reported losses. (See: Ford confounds analysts, posts $100 million profit in first quarter)
This investment is Kerkorian's third in a Detroit-area automaker, following an unsuccessful takeover bid for Chrysler in 1995 and the purchase of a General Motors stake a decade later.
He owned as much as 9.9-per cent of General Motors at one time but sold that stake in 2006, when GM rejected his proposed tie-up with Nissan Motor Co and Renault. Last year he made a $4.58-billion bid to buy Chrysler but lost out to private equity firm Cerberus Capital Management, who acquired 80 per cent of the company for $7.4 billion.
