Back in April, Kirk Kerkorian claimed he wanted to buy an extra 20 million shares of Ford Motor Co. That would have given him a total of 120 million shares and 5.6% of the Dearborn-based automaker. We learn today that Kerkorian took advantage of the demand for his offer of $8.50 per share and bought more than twice the amount of shares he originally intended. Tracinda Corp., Kerkorian's investment company, now owns 140.8 million shares of FoMoCo and a 6.49% stake in the automaker. He also now has a full $1 billion invested in the Dearborn automaker and has made it known that he is behind Ford's turnaround effort. This increased investment is surely putting your money where your mouth is.
The filing with the Securities and Exchange Commission hints that Kerkorian might sink more funds into Ford in order to save its money-losing U.S. operations. Kerkorian will also likely be in a position where he feels comfortable suggesting business strategies to get Ford back in the black. That could make him what they call an activist investor, a title Kerkorian's held at Chrysler and GM in the past. So much for those theories that he might remain hands-off.
Ford CEO Alan Mulally, Executive Chairman Bill Ford and Kerkorian just met a couple of days ago to talk about Ford's turnaround plan. Now that Kerkorian owns more of FoMoCo than the Ford family itself who owns just 3%, some might be scared by the quick move Tracinda has made. Never fear for the Ford family, however, as their minor stake is comprised of a special class of stock that gives them 40 percent of the voting power.
[Source: Automotive News, sub req, Photo by KAREN BLEIER/AFP/Getty]
Despite the rumors of contentiousness surrounding Kirk Kerkorian's Tracinda Corporation and its agitation in Dearborn, Ford reports that a recent talk between Executive Chairman Bill Ford Jr., CEO Alan Mulally, and the investment firm were informal and positive. Never a shrinking violet, 91-year-old Kirk Kerkorian has held large stakes of each of the Detroit 3 in the past. Tracinda's most recent foray into Ford's stock coincides with a shift by the Blue Oval away from its historically strong grounding in truck sales. Ford believes that the truck sales balloon has permanently deflated, and is idling plants and shifting production over to more fuel efficient vehicles as crude oil prices continue to ratchet up an economic squeeze.
Ford's already said "forget it" to a planned return to profitability in 2009, and its talks with Tracinda illustrate that Ford realizes it may not have the lock on better ideas. On the agenda at this particular meeting was an analysis of publicaly-announced details of "The Way Forward." Right now both Ford and Tracinda are coming away from the table repeating niceties, but if history is any guide, at some point Captain Kirk might start instigating in ways that are less than popular.
In late April, billionaire investor Kirk Kerkorian made public his intention to have Tracindo Corp., his investment company, buy up an additional 20 million shares of Ford stock to up his ownership of the Blue Oval from 4.7% to 5.6%. He offered $8.50/share, which at the time was a small premium over Ford's share price of $7.50 and today is a big premium over its current price of $6.16/share. He set a deadline for Ford shareholders to respond to his offer by yesterday at 5 PM, and boy did they. Kirkorian received offers to buy 1 billion shares of Ford, 980,000,000 more than he intends to buy. As such, Tracinda Corp. will easily acquire the additional shares it needs to reach 5.6% ownership of Ford at a price of around $170 million, but hasn't stated that it will buy up anymore of the Dearborn-based automaker. Ford's board of directors has already stated on record that it is neutral and has no opinion about Kirkorian's increase in shares. We wonder if their mood will change when he asks to sit down at the table with them at talk business.
There's no indication that a leopard has ever changed its spots, so while Kirk Kerkorian and his Tracinda Corporation are making noises like they'll strive to be hands-off Ford shareholders, we'd expect some eventual attempts at steering the automaker from the board. As part of an offer to purchase more shares, Tracinda Corp. stated to the Securities and Exchange Commission that it has no intent to gobble up or influence Ford. The Las Vegas-based investment firm went on to say that it will continue to monitor the performance of its holding, and may suggest business moves to the automaker.
Jerry York apparently took this to heart when he started mouthing off about what Ford should do with Volvo and Mercury, but that statement has since been rescinded as "shooting from the hip." It would not be a surprise, given the past attempts of Kerkorian and his toadies to direct the course of General Motors and Chrysler, that he once again start to make aggressive attempts at directing the moves of Ford. Tracinda is Ford's largest shareholder, though the hierarchy of Ford's board gives the family a lot of voting muscle. Kerkorian's most recent offer to Ford is for an additional 20 million shares at $8.50 per share, as well as the future prospect of a cash infusion to offer the turnaround plan further liquidity and thus, flexibility. Ford is mulling Kerkorian's bid, but the turnaround plan was put together without Tracinda's money, and can proceed without it, though more money on hand would allow Ford to accelerate its plans. Everyone's playing it cool, though meetings between Bill Ford Jr., Alan Mulally, and Kerkorian are ongoing, and the board of directors has promised a response to Kerkorian by May 22nd.
Kirk Kerkorian's associate Jerry York stated last Thursday that Ford would do well to sell Volvo and extinguish Mercury. Coincidentally (or not) Ford's stock zoomed up to one of the highest price levels it's seen in the last six months. Tracinda Corporation, Kerkorian's firm, has expressed faith in Mulally's leadership and his plan to strengthen the automaker. There has been speculation about a sale of Volvo in the past, and punditry has been begging the Blue Oval to do something with Mercury, or put it out of its misery, for years.
While York seems certain that Volvo will be on the market in less than two years time, Ford continues to state that the Swedish subsidiary is not for sale. Looking at the Premier Auto Group shuffle of the last year, though, it could certainly be deduced that Volvo will indeed go on the market soon. Moving the brand out of the PAG location in Irvine, CA and back to Rockleigh, NJ, where Volvo had set up shop when it first started selling cars in the United States, is a move that set off whispers of impending sale. While it might be nothing more than right-sizing office space for Volvo now that the rest of the Premier Auto Group is gone, a cross country move is a deft way to trim operational fat without layoffs, and divorcing Volvo's North American operations from Ford locations makes an ownership transition easier, too. While Ford and Volvo products share a lot of engineering and parts, a well-negotiated deal wouldn't preclude a sale that gently phases out the currently entwined platforms as they age and replacements are brought to market.
Posted May 2nd 2008 1:28PM by John Neff Filed under: Ford
Every villain needs a sidekick, and if there were ever a villain character in the soap opera that is the North American auto industry, it's 91-year-old billionaire Kirk Kerkorian who recently revealed that his private holding company, Tracinda Corp., was buying up Ford stock like he knew something the rest of us didn't. Kerkorian's sidekick in this saga is Jerry York, an ex-auto exec who the billionaire placed on GM's board of directors back when he was pushing for an alliance between the biggest of the Big 3 and Nissan/Renault.
York has revealed that he met with Ford CEO Alan Mulally after Tracinda Corp. began buying up Blue Oval stock and expressed his confidence in the executive's plan to turn around Ford. He also said that if it were him at the helm, both Mercury and Volvo would be sold. York thinks that Mulally will likely put Volvo up for sale in the next 18 months, but there's a bit more analysis to be done on whether or not to sell Mercury.
While Volvo might command a pretty penny on the open market for its brand cachet and expertise in the area of safety, we're not sure there's much demand out there for Mercury. We suspect that Ford is faced with the same question that GM was when it scuttled Oldsmobile: kill it or keep the lights on? Like Oldsmobile, Mercury is seen as a brand of rebadged vehicles so intertwined with its parent company that no potential buyer would want to deal with the long, expensive process of extricating it from Ford and starting over. But York thinks Ford might be able to get something for it, which doesn't say a lot to us about Kirkorian's sidekick. UPDATE:Ford issued a press release saying that Volvo is not for sale and that it continues to invest in Mercury. Lewis Booth, Volvo's CEO, also reiterated that his brand's not going anywhere.
The auto industry's old friend Kirk Kerkorian is back on the scene, and this time he has his sights set on Ford. In a press release issued today, Kerkorian's company Tracinda Corp. announced that it intends to buy 20 million shares of FoMoCo at $8.50 per share, which is a 13% premium over the $7.50/share at which Ford's stock closed on Friday. This would up Tracinda's ownership of Ford from 100 million shares at 4.7% to 120 million at 5.6%. In its press release, Tracinda expressed confidence in Ford's performance going forward under the leadership of Alan Mulally, and revealed that the investment firm has been watching the automaker since it surprised the industry with its Q4 2007 earnings. Last week's announcement of a better-than-expected Q1 2008 for Ford apparently sealed the deal for Kerkorian.
Kerkorian has had a tumultuous past with Ford's crosstown rivals, General Motors and Chrysler. At one time he owned nearly 10% of GM and tried to broker a deal between the world's largest automaker and Nissan-Renault that ultimately fell through, after which Kerkorian sold all of his stock in the General. He also sued DaimlerChrysler for its allegedly deceptive "merger of equals" statement back in 1998, then tried to buy Chrysler from Daimler after it was all over.
Ford has released a statement by Bill Ford, Jr. and Alan Mulally that can be read after the jump, but it basically says that the company's stock is able to be purchased by anyone, even Kirk Kerkorian. As for what the 90-year-old is up to with his bid to buy more Blue Oval stock, time will tell.
[Source: Bloggingstocks, Photo by William Thomas Cain/Getty]
Gajillionaire Kirk Kerkorian and his investment firm Tracinda Corp. washed their hands of General Motors yeseterday after selling off all of their remaining shares in the company. Their 19-month relationship with the automaker is marked by Kerkorian's failed attempt to get General Motors to form an alliance with Nissan/Renault, a move that he believed would hasten the automaker's turnaround and perhaps return a healthy profit on his investment.
The sell off happened in two stages on Thursday. Yesterday morning it was reported that Tracinda sold 14 million shares of GM stock, reducing its stake in GM to 4.95%. This news came just a week after Tracinda announced it had reduced its stake from 9.9% to 7.4%.
Late yesterday evening, however, the Wall Street Journal reported online that Tracinda unloaded its remaining 28 million shares in GM. Unfortunately, no one has been able to confirm if the last sell off is actually true and Tracinda Corp. has declined to comment. We'll have to wait until the sun rises on Wall Street to see how the news of Kerkorian's pull out affects the market, as well.
We'll keep you updated as soon as a confirmation one way or the other is released.
Billionaire investor Kirk Kerkorian announced today that his investment firm Tracinda Corp. had cut its stake in General Motors from 9.9% to 7.4% by selling $462 million worth of the automaker's stock. That amounts to a sell off of 14 million shares at $33 per share.
The move by Kerkorian comes after the soap opera-like events surrounding a proposed alliance between General Motors and Nissan/Renault that ultimately fell through despite Kerkorian's support. In fact, Kerkorian and the man he placed on GM's board, Jerry York, were the ones who proposed the alliance and approached Nissan/Renault without the board's knowledge. Many postulate that GM CEO Rick Wagoner didn't appreciate the surreptitious move that usurped his power and he therefore made sure the proposal was shot down. A committee chosen by Wagoner was set up to evaluate the alliance and found that the proposed alliance would benefit Nissan/Renault more than it would GM. For its part, Nissan/Renault was unwilling to pay a large sum of money that numbered in the hundreds of millions, which GM proposed would even out the partnership. On account of the failed alliance, Jerry York resigned from GM's board on October 6th.
Who knows what goes on in the mind of Kirk Kerkorian, but knowing what we know about GM's product lineup stretching out through 2010, we'd have to say that selling his stake in the company is a move that will probably lose money in the long run. We're not financial analysts by any means, but GM's turnaround has just started the back nine and will bear fruit in the form of profits before the end of 2008. Or so says our Magic 8-Ball.
Here's Nissan's official response to the flurry of speculation caused by Tracinda Corp., Kirk Kerkorian's investment company, when it sent a letter to General Motors suggesting the automaker immediately explore joining Nissan and Renault's alliance.
Issued by Nissan Motor Co., Ltd., Tokyo, Japan:
NISSAN STATEMENT The Renault-Nissan Alliance is an open partnership, which has never been restricted to two partners. Under the right circumstances and with the appropriate partners, the Alliance could be expanded further. Such an expansion would only be considered by the Alliance if it were executed in the full spirit of the Alliance, which is founded on trust, transparency, performance and the full respect for individual corporate and brand identity.
Mr.Ghosn, President and CEO of Renault and Nissan was approached by Mr.Kerkorian, Mr.York and representatives of Tracinda Corporation to assess the merits of GM joining the Renault Nissan Alliance.
At this point, it is necessary that GM Board and top management fully support this project in order to start the study of this opportunity after agreement of Renault and Nissan boards.
While Nissan certainly seems receptive to the idea of showing GM the secret handshake, it makes no mention of Renault and Nissan being interested in purchasing a minority stake in the General.
At the close of trading today GM ended up $2.35 (8.56%) at $29.79. For fun, we snagged a copy of the exact letter Tracinda sent to GM today. Read the whole thing (it's pretty short) after the jump.
The auto industry's old friend Kirk Kerkorian is back on the scene, and this time he has his sights set on Ford. In a press release issued today, Kerkorian's company Tracinda Corp. announced that it intends to buy 20 million shares of FoMoCo at $8.50 per share, which is a 13% premium over the $7.50/share at which Ford's stock closed on Friday. This would up Tracinda's ownership of Ford from 100 million shares at 4.7% to 120 million at 5.6%. In its press release, Tracinda expressed confidence in Ford's performance going forward under the leadership of Alan Mulally, and revealed that the investment firm has been watching the automaker since it surprised the industry with its Q4 2007 earnings. Last week's announcement of a better-than-expected Q1 2008 for Ford apparently sealed the deal for Kerkorian. 
Billionaire investor Kirk Kerkorian announced today that his investment firm Tracinda Corp. had cut its stake in General Motors from 9.9% to 7.4% by selling $462 million worth of the automaker's stock. That amounts to a sell off of 14 million shares at $33 per share. 
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