Tracinda Has 7.2% Stake in GM

Los Angeles billionaire Kirk Kerkorian increased his share in General Motors Corp. to about 7.2%, from 3.9%, after completing the purchase of 18.4 million shares, his company said Tuesday. The amount was less than announced on June 8 because some shares weren’t delivered.

The purchases by Kerkorian’s Tracinda Corp. raise his ownership to about 40.5 million shares from 22 million shares. That’s 437,726 shares, or 2.3%, fewer than the company announced in a preliminary report last week, Tracinda said.

The 88-year-old Kerkorian has said he plans to be a passive investor in the automaker. Previously, his company planned to buy as many as 28 million shares.

Kerkorian’s purchase has put pressure on GM Chief Executive Rick Wagoner to return the company to profit after a $1.1-billion first-quarter loss and a 6.7% decline in U.S. auto sales this year. Wagoner announced June 7 that the company would cut 25,000 North American manufacturing jobs through 2008 and close plants to reduce costs.

Kerkorian a decade ago launched a failed takeover bid for the former Chrysler Corp. -- now part of DaimlerChrysler -- and won concessions that included a representative on the Chrysler board. He disclosed May 4 that he was buying additional shares in Detroit-based GM. The news pushed GM shares up 18%, the biggest one-day gain in 40 years.

GM said May 19 that it would remain neutral on Kerkorian’s offer, urging each shareholder to “make its own decision.” Wagoner said last week that Tracinda hadn’t asked for a seat on GM’s board.

Wagoner has said he is pursuing a four-part plan to stem losses: create new products more people want to buy; develop marketing that relies more on low pricing and less on rebates; cut manufacturing costs; and reduce healthcare costs.

Union leaders said last week that the automaker might force healthcare cuts by the end of this month if the union didn’t agree to them. GM expects healthcare costs to rise to $5.6 billion this year.

GM shares have risen 27% since May 3, the day before Tracinda went public with its plans to buy a stake in the automaker. The stock closed below the $31 offer price six days during the tender offer period, which ended June 7.

On Tuesday, GM shares rose $1.42 to $35.87 on the New York Stock Exchange.

Kerkorian becomes the third-largest GM shareholder after State Street Corp. and Capital Research & Management, according to Bloomberg data. GM’s large investors increased their holdings in the first quarter by a combined 64 million shares as the stock hit a 13-year low.