Kerkorian's Tracinda Builds Stake in Ford
April 28, 2008

He’s back and Ford is the object of his affection this time.

Last Vegas billionaire Kirk Kerkorian, through his Tracinda Corp., has amassed 100 million shares for a 4.7 percent stake in Ford just this month. Further, Tracinda said it plans to buy up to 20 million more shares at a premium to last week’s closing price.

Kerkorian’s move on Ford is a vote of confidence for Ford management led by CEO Alan Mulally and the company’s turnaround prospects.

The revelation that Tracinda had acquired Ford stock and planned to buy more came immediately after Ford announced last Thursday that it had posted a first-quarter profit to the surprise of industry analysts who had projected a loss. Tracinda noted in a statement that Ford had started "to achieve highly meaningful traction in its turnaround efforts” and "will continue to show significant improvements in its results going forward."

Indeed, the rest of the stock market agreed. Ford stock rose 12 percent on Thursday the day of the earnings announcement, dipping back some on Friday. Tracinda said it would pay a 13 percent premium on Friday’s closing price.

The Wall Street Journal reported Monday that Tracinda began accumulating 100 million Ford shares since April 2 at an average $6.91 a share. It has offered $8.50 a share for the additional 20 million shares. Ford stock closed at $7.50 a share on Friday.

In a statement issued Monday morning, Mulally and Chairman Bill Ford said in response to Tracinda's move: "We welcome confidence in Ford and the progress we are making on our transformation plan. We welcome confidence in Ford and the progress we are making on our transformation plan.  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.”

With his purchase of Ford stock, Kerkorian now has purchased hefty stakes in all of Detroit’s three automakers.

Tracinda was Chrysler’s largest shareholder in Chrysler before it was sold to Daimler in the 1990s. Kerkorian sued Daimler for the buyout of Chrysler but lost. Earlier, in 1995, Tracinda, in cahoots with former Chrysler CEO Lee Iacocca and fellow former Chrysler CFO Jerome York, unsuccessfully tried to take over Chrysler.

Tracinda also owned a sizeable stake in General Motors, one worthy of a seat on the board of directors which was occupied by Tracinda’s York. However, Tracinda would up selling its GM stock after GM rejected an alliance with Nissan, engineered by Tracinda.

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