Saturday, December 02, 2006

Kerkorian sells 14M GM shares

Thursday, November 23, 2006
Kerkorian sells 14M GM shares
Stocks tumble after billionaire investor reduces stake in automaker to 7.4%.
Bill Vlasic / The Detroit News

DETROIT -- General Motors Corp.'s stock tumbled 5 percent Wednesday after dissident shareholder Kirk Kerkorian reduced his stake in the automaker by 14 million shares.

Kerkorian's surprise move stirred speculation that the billionaire investor may be backing off on his aggressive campaign to influence the strategic direction of the No. 1 U.S. automaker.

Even after the sale, Kerkorian is still GM's fourth-biggest shareholder with 7.4 percent of the stock; he previously owned 9.9 percent. And he left the door open to buying or selling more GM stock depending on the company's future performance.

Wall Street was hardly pleased with Kerkorian's decision to scale back his investment. GM shares fell $1.52 to close at $31.09 in heavy trading Wednesday on the New York Stock Exchange.

One analyst suggested that Kerkorian has grown frustrated with GM since Chairman Rick Wagoner rejected a proposed alliance last month with foreign automakers Renault SA and Nissan Motor Co.

"The news of Kerkorian lowering his position is what the market apparently feared most," said John Murphy of Merrill Lynch. "It now appears instead of becoming a more aggressive activist, he may be allocating his capital to other opportunities he believes have higher potential returns."

Kerkorian pressured Wagoner in July to open talks with Renault-Nissan CEO Carlos Ghosn. The negotiations collapsed before an October deadline when GM demanded a cash payment to join the global partnership.

Shortly after the talks ended, Kerkorian's top deputy, Jerry York, quit GM's board and said he had "grave reservations" about the company's ability to compete with Asian manufacturers.

Industry observers have wondered if Kerkorian would launch a fight for control of GM's board.

But the Las Vegas casino mogul kept quiet until Wednesday's announcement he had sold shares for $462 million in a "private transaction."

In its filing with the U.S. Securities and Exchange Commission, Kerkorian's Tracinda Corp. investment arm said it may buy or sell more GM shares depending on factors including "the business affairs and financial condition" of the automaker.

In a separate SEC filing, Tracinda said Wednesday it plans an $825 million tender offer to increase Kerkorian's stake in the MGM Mirage Inc. casino empire.

A GM spokesman declined Wednesday to interpret Kerkorian's latest moves. "It is not our practice to speculate on what motivates our investors," Tony Cervone said.

One industry observer said it would be a mistake to assume Kerkorian -- who once tried to buy Chrysler Corp. in the mid-1990s -- is walking away from GM.

"The sale in itself tells us nothing about what his intentions are," said John Casesa of Casesa Strategic Advisors LLC.

GM's three biggest shareholders are Boston-based State Street Corp., with 15 percent; San Diego-based Brandes Investment Partners, with 9 percent; and Capital Research & Management Co., with 8.2 percent.

You can reach Bill Vlasic at (313) 222-2152 or

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