Kirk Kerkorian boosts his stake in Ford

updated 4:45 p.m. ET April 28, 2008

DETROIT - Billionaire investor Kirk Kerkorian, making another attempt to shape the U.S. automotive industry, disclosed Monday that he had acquired a 4.7 percent stake in Ford Motor Co. and hoped to boost his holdings as the company tries to return to sustained profitability.

Tracinda Corp., Kerkorian’s investment company, said it planned to make a $170 million cash offer for up to 20 million additional shares at $8.50 a share, citing evidence that Ford’s turnaround plan was working.

Kerkorian’s announcement touched off a wave of speculation on how he might try to influence the Dearborn, Mich., automaker in the coming months. The 90-year-old mogul made an unsuccessful bid for Chrysler last year and pushed for General Motors Corp. to form an alliance with Nissan Motor Co. and Renault SA in 2006 after acquiring nearly 10 percent of the company.

The Ford family, while owning 4 percent of the company’s shares, has 40 percent voting rights of the company through a special class of stock, making a takeover unlikely, analysts said. Kerkorian could be interested in leaving his imprint on the company’s turnaround, putting an ally on Ford’s board or advocating for an alliance with another automaker, they said.

“Tracinda is unlikely to be activist in the conventional sense given the voting structure. Instead, we believe it will seek to be a ’constructive agitator,”’ said Morgan Stanley & Co. auto analyst Jonathan Steinmetz in a note to investors.

Kerkorian’s offered price represents a 13.3 percent premium over Ford’s closing price on Friday.

Video   Ford’s road ahead April 24: Ford’s CEO Alan Mulally discusses the automaker’s surprise quarterly profit and cautious outlook for the rest of 2008. CNBC

Tracinda said Ford’s first-quarter results reinforced that the company is having success in its turnaround efforts, despite the difficult U.S. economy.

“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,” Tracinda said in the statement.

Ford on Thursday announced it had turned a surprise profit of $100 million in the first quarter of this year, its first quarterly profit since the second quarter of 2007.

Following the positive news, Mulally reiterated his promise that the automaker’s restructuring will return Ford to black ink for 2009.

Tracinda said it began accumulating 100 million Ford shares, or 4.7 percent of the outstanding stock, on April 2 at an average cost of $6.91 per share. If his latest offer is accepted, that stake will increase to 5.6 percent.

An investor has to file a disclosure with the U.S. Securities and Exchange Commission if he goes over 5 percent of the voting stock in a publicly traded company.

Kevin Tynan, an analyst with New York-based Argus Research, said Kerkorian was likely trying to be more than just a passive investor.

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