The first time Kirk Kerkorian got involved in the auto business, he was a Los Angeles teenager. He bought old cars, refurbished them and resold them for a $10 or $15 profit.
Seventy-five years later, only the scale of Kerkorian's operation has changed.
The investor unveiled a $4.5-billion all-cash bid Thursday to buy Chrysler Group, the faltering No. 3 U.S.-based automaker, from its German parent, DaimlerChrysler. It was the latest effort by the billionaire to buy a stake in America's once-high-flying automotive industry.
In a time of persistently high prices at the pump, the owner of the Chrysler, Jeep and Dodge brands has had trouble moving gasoline-hungry pickups and sport utility vehicles off dealer lots, so much so that the company lost $1.46 billion last year.
How far has Chrysler Group fallen? Kerkorian's bid to take the company private was seen as credible by some on Wall Street, even though the offer is one-eighth of the $36 billion the then-Daimler-Benz paid for the American automaker in 1998.
Although some analysts said the surprise bid could jump-start an auction for the automaker, others cautioned that the offer was at the low end of estimates for the value of the business. In addition, Kerkorian's offer contains potential stumbling blocks such as a condition that Chrysler reach a "satisfactory" conclusion to what could be rocky contract talks with the United Auto Workers this fall.
A spokeswoman for Tracinda Corp., Kerkorian's investment company, said the mogul "believes there are long-term possibilities for the company."
Kerkorian has a good track record of seeing such possibilities when others do not. He made a $22.8-billion offer for Chrysler in the mid-1990s, teaming with former company Chairman Lee Iacocca. Kerkorian, who held a sizable stake in Chrysler, was rebuffed but eventually made $2.7 billion on his investment after the deal with Daimler-Benz.
In 2005 he began accumulating shares in a foundering General Motors Corp. Although stymied in his attempt to revamp the company, he still made some pocket change off the venture: about $100 million.
Kerkorian, who runs his empire out of nondescript, unmarked offices in Beverly Hills, has no interest in cars as such. To get around town, he chooses such middle-of-the-road vehicles as a Pontiac Firebird, a Jeep Grand Cherokee and a Ford Taurus. His visits to Detroit are exceedingly rare.
What motivates him is the thrill of the deal. It's a chance to pit his gambling instincts, honed over the course of his life in venues as diverse as boxing rings, aircraft cockpits and high-stakes casinos, against the market.
He bought and sold Metro-Goldwyn-Mayer Inc. three times, making a profit each time. Kerkorian first visited Las Vegas during World War II, shortly before mobster Bugsy Siegel opened the Flamingo Hotel and essentially made the town a tourist destination. Kerkorian later bought the Flamingo and many other hotels and casinos.
MGM Grand, a public company of which Kerkorian owns 62%, is now the biggest single player in Vegas, with properties such as the Mirage, Bellagio and Mandalay Bay. Forbes magazine recently estimated his net worth at $15 billion.
Even some of those who know him are surprised that Kerkorian, who will turn 90 in June, is still bidding for companies.
"I would think he'd want to quit buying and selling and settle down," Irving Converse, who paired with Kerkorian on the senior tennis circuit, said Thursday. "But he's still got that ambition to buy and sell empires."
The billionaire acknowledged as long ago as 1969 that he had already made enough money to retire. "But that," he said, "would be a pretty dull life for me, wouldn't it?"
He has a couple of rules. One of them is never bet your entire fortune on one venture. His father, an Armenian immigrant who accumulated a string of properties in the Central Valley, did that and was wiped out in the 1921-22 recession.
Another is to develop a checklist highlighting the reasons for any investment: Keep it short. Don't get caught up in distractions.
The first time he went after Chrysler, Kerkorian told The Times in 2005, "I did a little research, just a few items. Chrysler had bought a lot of its own stock the year before for twice the price we were paying. That struck me as a good sign."
Tracinda's offer for Chrysler came a day after Dieter Zetsche, chairman of DaimlerChrysler, confirmed for the first time that the company had talked to potential buyers of its U.S. division. He provided no specifics, to the chagrin of shareholders concerned that Chrysler's troubles were weighing on the company's flagship Mercedes-Benz nameplate.
A spokesman for DaimlerChrysler declined to comment Thursday other than to say that "all options remain on the table."
In a letter to Zetsche, Kerkorian advisor Jerome York, a former top-ranking Chrysler executive who was the billionaire's representative on the GM board, outlined a three-point plan for turning around Chrysler.
The proposal calls for increased investment to update Chrysler's vehicle lineup, a shift toward "greener" vehicles more in tune with current customer demand, and an increase in product quality to help the company lure buyers from Asian automakers.
That would be part of what York called "a very long-term approach to solving Chrysler's problems." As a private company, he said, the automaker would no longer have to make decisions based on satisfying Wall Street's demand for higher profit every quarter.
The goal is to buy time for "the initial five-, six- or seven-year period it will likely take to build Chrysler into a robust and lasting, stand-alone entity," he wrote. And offering a substantial ownership stake in the company to the United Auto Workers union, which represents Chrysler's blue-collar employees, would be part of a plan to reduce healthcare costs, York wrote.
But analysts saw potential problems in two conditions Tracinda placed on its offer: a satisfactory new contract with the UAW and an agreement with DaimlerChrysler to share the unfunded pension and healthcare liabilities for Chrysler retirees, which have been estimated as approaching $20 billion. The letter didn't say what would constitute an acceptable labor contract or how the liabilities might be divided.
The offer is meaningless until those issues are resolved, said David Healy, an analyst at Burnham Securities Inc.
Tracinda attorney Terry Christensen disagreed. Although Kerkorian's team hasn't met with either the UAW or Chrysler management, Christensen said, "people friendly with us have had discussions with leaders of the UAW, and there appears to be an interest in looking at this type of ownership."
He also cited York's long-standing ties to Chrysler's upper management as a key to Tracinda's confidence that its overture would get serious consideration.
UAW officials did not return calls seeking comment.
At least three groups have reportedly expressed interest in Chrysler, including Canadian auto parts supplier Magna International Inc., which has reportedly submitted a bid to buy the business for as much as $4.7 billion. A spokesman for Magna did not return calls seeking comment Thursday.
Cerberus Capital Management and a consortium of investors led by Blackstone Group each have reviewed Chrysler's finances and are expected to make bids. Spokesmen for the two firms declined to comment.
Estimates of Chrysler Group's value have ranged from zero, because of its liabilities, to $13.7 billion.
Even if it stalls, Kerkorian's bid -- in particular, an offer to post a $100-million deposit in exchange for an exclusive 60-day negotiating period -- may help the Chrysler sale process get going, one analyst said.
"By setting a 60-day time frame, he's galvanized the process to really move forward," said Catherine Madden, an automotive analyst at consulting firm Global Insight.
Kerkorian's earlier experience with Chrysler, though profitable, ended up in court after the investor sued DaimlerChrysler for $1 billion over terms of the 1998 takeover deal. Kerkorian lost at trial but is appealing.
Response in Germany to Tracinda's bid was muted. York's letter arrived at DaimlerChrysler headquarters in Stuttgart late Thursday local time -- the eve of the three-day Easter holiday. The German stock market and most corporate offices will be closed today for Good Friday.
In New York, DaimlerChrysler's U.S.-traded shares rose $4.23, or 5.3%, to $84.80, their highest level since July 1999. The rally suggested investors were happy to learn of an actual offer, even at a fraction of what Chrysler sold for nine years ago.
"Is it a number the shareholders are satisfied with? Probably not," said Madden of Global Insight. "But is it a number they may have to accept in the end to get rid of an unprofitable division? That may be the case."
Times staff writer Christian Retzlaff in Berlin contributed to this report.
Dec. 1990: Kirk Kerkorian buys 9.8% of Chrysler's stock for $272 million.
Nov. 1994: Kerkorian threatens to sue Chrysler unless it gives shareholders a higher dividend or buys back stock to boost the price. The company does both.
Dec. 1994: Kerkorian increases his stake in Chrysler stock to 10.2%.
April 1995: Chrysler rejects a $22.8-billion offer by Kerkorian and former Chrysler Chairman Lee Iacocca to buy the firm.
Aug. 1995: Kerkorian raises his share of Chrysler stock to 13.6%.
Oct. 1995: Chrysler Chairman Robert J. Eaton says that "mudslinging" by Kerkorian is hurting the company.
Oct. 1995: Kerkorian demands three seats on Chrysler's board.
Nov. 1995: Joseph Antonini resigns from Chrysler's board two days after Kerkorian demands his ouster.
Feb. 1996: In a deal with management, Kerkorian agrees to quit buying Chrysler stock for five years in return for one of his allies getting a seat on the board.
May 1998: Daimler-Benz announces takeover of Chrysler; Kerkorian makes $2.7 billion in the transaction.
Nov. 2000: Kerkorian sues DaimlerChrysler, accusing the company of lying about its intent to acquire Chrysler.
Dec. 2003: Trial begins in Kerkorian suit against DaimlerChrysler.
April 2005: Court rules in favor of DaimlerChrysler in Kerkorian suit.
Sept. 2006: Kerkorian begins appeal in DaimlerChysler case.
Source: Times research by Scott Wilson