Just four months ago, Kirk Kerkorian had a cup out and was asking passers-by for some spare Ford shares. Although he only wanted 20 million of them, he was offered one billion. Turns out those folks trying to get out of the Ford ownership business might have been a bit more prescient than the Tracinda billionaire. After a couple more weeks of watching Ford's share price begin digging toward the center of the earth, Kerkorian seems to want out of Ford himself.
A week ago Tracinda shed 7.3 million shares, and now it has unloaded another 26.4 million at an average price of $2.01 per share. That's about $6 less than he paid for them. Kerkorian used a $600 million line of credit from Bank of America to finance the original billion dollar investment in Ford, using shares in his MGM casino for collateral. In addition to the loss on the Ford investment, MGM's stock price hasn't held up either, and that means he's had to commit more of the casino to B of A. Kerkorian's latest divestment takes him under 5% ownership of The Blue Oval, which means he doesn't have to divulge any more share sales, but we have a feeling it won't be the last.
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.
We just reported that a group of Chrysler employees in Toledo are crafting a proposal that would have the automaker's 50,000 UAW workers buy a controlling stake in the automaker. The proposed worker buyout offer is already stirring up a reaction among the major players involved in the potential sale of the Chrysler Group. Buzz Hargrove, president of the Canadian Auto Workers union, told Automotive News this morning that his organization is not interested in the proposal being put together by the Employee Buyout Committee. In his estimation, workers have already hitched their jobs and pensions to Chrysler's wagon, and that's enough. Hargrove admitted, however, he had not read the plan yet.
Though the UAW is getting the cold shoulder from its border brothers, billionaire investor Kirk Kerkorian is reportedly interested in meeting with the Employee Buyout Committee to discuss working together to acquire Chrysler. Kerkorian and his investment firm, Tracinda Corp., have already made a low-ball bid of $4.5 billion for the Chrysler Group. Perhaps sensing his reputation is a liability in these matters, Kerkorian may be looking for a partner in the UAW employees that could get him to the negotiating table.
As 4,312 hourly Chrysler workers in Canada and the US accepted early retirement and buyout plans, Kirk Kerkorian released a statement again asserting his desire for a "true partnership" with the UAW and Chrysler management that would entail "equal sharing in the 'risks and rewards'" of a sale to his company, Tracinda. While acknowledging that a successful purchase by Tracinda couldn't (or at least, shouldn't) happen without all parties involved welcoming the deal, Kerkorian calls his plan for the company a "transformation" and claims that it takes everyone's best interests into account.
As expected, his public jump into the foray has flushed more details out from other bidders. Magna International, the parts supplier, had apparently registered a bid of $4.7 billion, and according to UAW President Ron Gettelfinger the other bidders have already approached the UAW about equity partnership. The UAW has not yet talked to Tracinda, and he made no comment about whether the union even wants to be an equity partner. With respect to all of the bidders, it is unclear how much the union would be expected to give up in wages and health care in return for just how many board seats and just much equity ownership. With new labor contract negotiations coming up, the UAW has quite a number of possible outcomes to consider.
DaimlerChrysler and its investment adviser, J.P. Morgan, will open deeper discussions with bidders next week.
Tracinda, billionaire investor Kirk Kerkorian's company, sent two letters today, one to DaimlerChrysler's CEO Dieter Zetsche and the other to the Supervisory Board, detailing an offer of $4.5 billion in cash to buy the Chrysler Group. Kerkorian, who has been major Chrysler shareholder for more than ten years, tried to buy the company in 1995 with Lee Iaccoca but met with rejection, and following that was a factor in the DaimlerChrysler merger. Sensing a second opportunity, he has done his usual and placed himself squarely in the middle of things.
The letter to the Supervisory Board details that the offer, which would not need to be financed, would be contingent on "reaching a new satisfactory collective bargaining agreement" with the UAW, and sorting out an "equitable arrangement" with DCX on pension liabilities and health care costs. To show the seriousness of its intentions, Tracinda offered $100 million to be the exclusive negotiating partner and receive "exclusive right to conduct due diligence for 60 days." Barring any hidden surprises, if Tracinda decided not to follow through with the sale, DCX would keep $25 million. In what might be an attempt to get the UAW and Chrysler execs on its side, Tracinda points out that it would partner "with the UAW and senior management of Chrysler" and offer them "the opportunity to participate with Tracinda as equity partners in the transaction." Of course it's impossible to say what that would really mean if a sale were to occur, but at the very least it might compel the other bidders to make some sort of statement about their intentions in that regard.
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.
Rick Wagoner may have won the Renault-Nissan battle, but the boardroom wars are far from over for General Motors' beleagured chief executive. Wall Street analysts are telling investors to brace themselves for a lengthy and bitter fight for control of the company's board of directors, led by dissident shareholder Kirk Kerkorian.
Kerkorian's right hand man in his GM adventure, Jerry York, resigned last week from the GM board, saying in his resignation letter that the board environment made it hard for directors to challenge management and that GM should have brought in advisers for the board to evaluate independently the potential benefits of an alliance with Renault and Nissan.
York is set to make another presentation to GM investors at the end of the month, this time in Las Vegas. His last such presentation, this January in Detroit, was scathingly critical of GM's turnaround strategy, and after his stint on the board, we can expect him to fire a new salvo with fresh ammunition.
Kerkorian, meanwhile, is expected by some analysts to be preparing for a proxy fight to shift the balance of power in GM's board and ultimately give Rick Wagoner the boot.
"Screw you guys, I'm going home." A phrase made famous by Cartman from South Park but one that we find so apt for news coming out of General Motors this afternoon. Royally irked over the ending of alliance talks with Renault/Nissan, billionaire investor Kirk Kerkorian has announced that he won't buy an additional 12 million shares of GM stock as he said he would, and that his advisor/muscle Jerry York has resigned his seat from the board of General Motors. The additional 12 million shares would've pumped Kerkorian's share of GM from 9.9 percent to around 12 percent. What will Kerkorian do now after his move to manhandle GM management has failed? Who knows, as this guy has been anything but predictable.
UPDATE: They Speak! Official release addressing dissolution of talks after jump.
We're now awaiting official word from Renault (it came, see after jump) concerning the break off of talks between the automaker, its alliance partner Nissan, and General Motors. While we're waiting, we thought you'd be interested in a few more details that are perhaps pertinent to figuring out why these three-month long exploratory talks ended abruptly with less than two weeks to go.
The WSJ reports that GM chief Rick Wagoner and head of Nissan and Renault Carlos Ghosen spoke on the phone this morning and agreed the two sides were not seeing eye-to-eye on the value of an alliance. GM basically put the question to the other side, "What's it worth to you?"
The largest single sticking point seems to be GM's demand that Nissan-Renault pay a "control premium" if it purchased 20-percent of the General's stock. GM believed that since Renault-Nissan would make out like a bandit if such an alliance were to happen, that the Franco-Japanese automaker should make a lump payment to GM to make up the difference and equalize everyone's interests. The two sides couldn't come to an agreement on how much additional coin Renault-Nissan should cough up for the pleasure of doing business with GM, so that's when the party ended.
Yesterday GM gave us a big indication that the alliance wouldn't happen when the board of directors made amendments to the company's bylaws that will make it difficult for a single shareholder to rally other shareholders and influence management. That's exactly what billionaire investor Kirk Kerkorian did to start this whole GM/Renault-Nissan business, and yesterday the board made it so that such a move by a single share holder would be much more difficult in the future. Clearly GM management did not appreciate being manhandled into this situation, which probably spelled its doom from the get-go.
In the end, this whole business seems to have turned out to be a big waste of time. Though Mr. Kerkorian believed he was acting in the best interest of the company in which he owns a 9.9-percent stake, perhaps he should sit down now and let the real auto executives do their jobs. GM is beginning to finally show signs of life and distractions are the last thing its management needs.
Just four months ago, Kirk Kerkorian had a cup out and was asking passers-by for some spare Ford shares. Although he only wanted 20 million of them, he was offered one billion. Turns out those folks trying to get out of the Ford ownership business might have been a bit more prescient than the Tracinda billionaire. After a couple more weeks of watching Ford's share price begin digging toward the center of the earth, Kerkorian seems to want out of Ford himself.
Rick Wagoner may have won the Renault-Nissan battle, but the boardroom wars are far from over for General Motors' beleagured chief executive. Wall Street analysts are telling investors to brace themselves for a lengthy and bitter fight for control of the company's board of directors, led by dissident shareholder Kirk Kerkorian.
"Screw you guys, I'm going home." A phrase made famous by Cartman from South Park but one that we find so apt for news coming out of General Motors this afternoon. Royally irked over the ending of alliance talks with Renault/Nissan, billionaire investor Kirk Kerkorian has announced that he won't buy an additional 12 million shares of GM stock as he said he would, and that his advisor/muscle Jerry York has resigned his seat from the board of General Motors. The additional 12 million shares would've pumped Kerkorian's share of GM from 9.9 percent to around 12 percent. What will Kerkorian do now after his move to manhandle GM management has failed? Who knows, as this guy has been anything but predictable. 
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