Kerkorian: Absent but Accounted For : Autos: Talk of his takeover attempt dominates Chrysler’s annual meeting. Company announces 25% boost in dividend.
Kirk Kerkorian, the reclusive investor who is pursuing what so far has been an ill-starred takeover of Chrysler Corp., dominated the company’s annual meeting Thursday even though he and his aides were no-shows.
Chrysler used the occasion to announce a 25% dividend increase and a possible expansion of its $1-billion stock buyback program, steps aimed at pumping up the share price and undermining support for Kerkorian’s hostile offer.
The dividend increase is the fourth by Chrysler in the past 17 months. The annual payout is now $2 a share, but that’s well below the $5 a share Kerkorian has been seeking.
The dividend increase was widely expected by investors, and Chrysler’s stock fell $1.125 to $42.625 on the New York Stock Exchange. Alex Yemenidjian, a spokesman for Kerkorian’s Las Vegas-based Tracinda Corp., said in a telephone interview that the dividend hike is a small step forward, but “it does not even begin to address the fundamental issue of substantially increasing value for all Chrysler shareholders.”
Kerkorian, a 77-year-old billionaire who controls the MGM Grand Hotel and Casino, is still seeking financing for the buyout, valued at more than $20 billion, and is exploring a possible proxy battle.
Despite his absence at Chrysler’s annual meeting, Kerkorian was the main topic of discussion among shareholders, management and the media.
“Don’t let Chrysler become another R.J. Reynolds-Nabisco,” said Erwin Schlather, a stockholder and retired Chrysler millwright from St. Louis, referring to the $25-billion corporate buyout that was the most expensive in U.S. history.
In a lengthy address to shareholders, Chairman Robert Eaton expressed frustration with Wall Street, noting that despite five quarters of record sales and profit, the firm’s stock has lost 30% of its value.
Thursday’s actions were a clear anticlimax after weeks of sparring between Chrysler and Kerkorian. Chrysler rejected Kerkorian’s $55-a-share bid, and some analysts have declared it all but dead because of an apparent lack of financing.
Kerkorian said April 12 that he wanted to buy the 90% of Chrysler shares he does not already own. Chrysler said the proposal would burden the company with too much debt and make it vulnerable during the next economic downturn.
Eaton denied that the board increased the dividend in response to Kerkorian. But he acknowledged that the suitor’s unwanted proposal is interfering with Chrysler’s operations.
“Clearly, Mr. Kerkorian has been a very disruptive force in the company,” Eaton said, adding that he was disappointed that former Chrysler Chairman Lee Iacocca was a partner with Kerkorian.
