Billionaire Kirk Kerkorian said Monday he is stepping back into the US auto industry by building up a major stake in Ford Motor Co. and praised the troubled automaker's “meaningful traction in its turnaround efforts.”
Kerkorian, who has failed in bids to acquire Chrysler and steer General Motors Corp. into an alliance with Renault-Nissan, said he has built a 4.7 percent stake in Ford in three weeks and is seeking another one percent of the second-largest US automaker.
In a statement, Kerkorian's personal holding company Tracinda Corp. said it was seeking about 20 million shares of Ford at 8.50 dollars a share — a 13.3 percent premium over Ford's closing price Friday.
The offer represents 38.7 percent premium to the stock's price on April 2, when Tracinda began accumulating a stake in Ford.
Upon completion of the deal Kerkorian would own about 5.6 percent of the Michigan-based automaker.
The 90-year-old investor, who made a fortune from running and selling Las Vegas casinos, and has held big stakes in General Motors and Chrysler, expressed confidence in Ford management.
“Tracinda has been following Ford closely since the company released its fourth-quarter 2007 results which indicated that Ford's management was starting to achieve highly meaningful traction in its turnaround efforts,” the statement said.
“Last week this was reinforced by Ford's first-quarter 2008 results, achieved despite the difficult US economic environment. Tracinda believes that Ford management under the leadership of chief executive officer Alan Mulally will continue to show significant improvements in its results going forward.”
Ford, which last year lost the number-two spot in its home market for the first time since 1931 to Japan's Toyota Motor, last week posted a first-quarter profit of 100 million dollars in a surprise turnaround after heavy losses.
Ford officials said they were still on track to achieve full-year profitability in 2009.
In a vast restructuring and cost-cutting initiative, Ford is shutting 16 factories in North America and is planning further staff reductions after cutting more than 40,000 jobs.
Ford executives welcomed Kerkorian's investment but appeared to distance themselves from the idea of letting Kerkorian steer the company in a new direction.
“We welcome confidence in Ford and the progress we are making on our transformation plan,” Mulally and Ford chairman Bill Ford said in a statement.
“Any investor can purchase Ford shares, which are sold on the open market. The Ford team remains focused on executing our plan to transform Ford into a lean global enterprise delivering profitable growth for all.”
Kerkorian — who has a reputation as an investor who turns around troubled companies — was at one point Chrysler's biggest shareholder and had launched his own bid for the auto giant before backing the deal to sell the firm to Germany's Daimler-Benz.
Years later, Kerkorian filed suit, saying false statements were made about a “merger of equals” of Chrysler and Daimler, and claimed the German firm had diminished his share value. But his suit failed.
In 2006, Kerkorian boosted his stake in General Motors, the largest US automaker, and won a board seat for one of his associates, but later reduced his holdings after failing to engineer an alliance with Nissan-Renault.
Kerkorian announced another bid for Chrysler in 2007 before the announcement of the sale of the US division to private equity firm Cerberus.
“While Tracinda's motivations are far from clear at this stage, one logical possibility is that it will eventually push for a Ford alliance with Renault-Nissan,” JPMorgan Chase analyst Himanshu Patel wrote in a research note.
Patel said Nissan-Renault chief Carlos Ghosn “is still eager to find a North American partner.” Ghosn held unsuccessful alliance talks with GM in 2006.
“Initial professions not withstanding, Kerkorian's role in the auto industry has been anything but passive,” analyst at Bear Sterns wrote in a research note.
However, the Ford family's major stake in the automaker will limit Kerkorian's power to force change, they added.
Ford shares were up 9.47 percent higher Monday to close at 8.21 dollars.
