Kerkorian Formally Bids for GM Shares
Billionaire investor Kirk Kerkorian went ahead Monday with an offer to buy as many as 28 million General Motors Corp. shares -- a bid that would roughly double his stake in the automaker -- despite last week’s downgrade of GM debt to “junk” status.
Kerkorian’s investment firm, Beverly Hills-based Tracinda Corp., is offering nearly $870 million, or $31 a share, according to documents filed with the Securities and Exchange Commission. If all 28 million shares are purchased, Kerkorian would own 8.8% of GM, or a total of 50 million shares. The offer is set to expire June 7, the day of the automaker’s annual meeting in Wilmington, Del.
Shares of GM rose 57 cents to $31.33 on the New York Stock Exchange.
GM’s stock price soared more than 18% last week when Kerkorian announced his plan, but the shares tumbled the next day when Standard & Poor’s Corp. downgraded GM’s debt to below investment grade.
GM said Monday that it would review Kerkorian’s offer and file comments with the SEC by May 20, as required by law.
In its filing, Tracinda said it was acquiring the shares for investment purposes only and did not intend to acquire or influence control over GM’s business. But Kerkorian has never been known as a passive investor. The 87-year-old is in the middle of a five-year legal battle over terms of the 1998 merger of Daimler-Benz and Chrysler Corp. that formed DaimlerChrysler. Kerkorian was a major Chrysler shareholder.
“Unless he sees the money come in pretty quickly, he will become irritating,” said Gerald Meyers, a former chairman of American Motors Corp. who teaches at the University of Michigan. “Everybody feels somewhat defeated by this turn of events. It’s a sad day for GM that this guy has come after them.”
Meyers added that it was not surprising Kerkorian went ahead with his offer despite the S&P; downgrade.
“He’s really committed,” Meyers said. “He has a track record, and when he decides to go after something, he goes after it.”
Tracinda did not address the downgrade in its statement Monday, and a Tracinda spokeswoman did not return a call for comment. Tracinda is the majority owner of casino and hotel operator MGM Mirage Inc.
