Kerkorian ups stake in GM to 7.2 percent

[pupp1]

Kerkorian ups stake in GM to 7.2 percent
Reuters / June 08, 2005
DETROIT -- Las Vegas casino mogul Kirk Kerkorian has fallen short in his bid to more than double his stake in General Motors after failing to pry loose enough shares from other investors in the ailing automaker.

Kerkorian, who shook up the former Chrysler Corp. with a hostile takeover bid a decade ago, had offered to spend up to $868 million to buy as many as 28 million GM shares at $31 a piece under a tender launched last month.

But the number of shares tendered fell far short of that goal, according to a statement on Wednesday from Kerkorian's investment firm, Tracinda Corp.

Citing a preliminary count by Mellon Investor Services, Tracinda said only about 18.9 million shares had been offered up.

Tracinda, the majority owner of casino and hotel operator MGM Mirage Inc., already owns 22 million GM shares, or about 3.9 percent of the company. It said it would now own 40,926,557 shares, or 7.2 percent.

Under the tender offer, which expired on Tuesday, Kerkorian had sought to control nearly 9 percent of the world's largest automaker. A GM spokesman said a 7.2 percent stake was still expected to make Kerkorian the company's biggest individual investor, however.

Ironically, Kerkorian's tender offer was hampered by its own initial success. GM's shares soared more than 18 percent to $32.80 on the New York Stock Exchange, when Tracinda announced the offer on May 4, and analysts said it buoyed investor confidence in a tarnished icon of American industry.

"We view the tender offer being undersubscribed as a useful gauge of sentiment towards GM shares," JPMorgan analyst Himanshu Patel said. It indicates, he said, that "most holders who wanted to sell out at or below $31 did so, in turn suggesting the stock has downside support at current levels."

If the offer had been oversubscribed it might have been seen as a negative for GM, and a vote of no confidence in its ability to return its core automotive operations to profitability.

"OPEN MARKET"

But analyst David Healy of Burnham Securities said market forces simply worked against Kerkorian, whose tender offer price was widely seen as having set a floor for GM shares.

"It was undersubscribed because during most of the time that the tender offer was in effect the market price of the stock was higher than the tender offer," Healy told Reuters. "If you wanted to sell your GM stock you'd receive more if you sold it on the open market than if you tendered it to Kerkorian."

Kerkorian's offer followed GM's first-quarter loss of $1.1 billion, its worst result since it narrowly escaped bankruptcy in 1992, and management's efforts to seek relief from its largest union to help cut massive health-care costs.

It also came a day before GM and cross-town rival Ford Motor Co. saw their credit ratings cut to "junk" status for the first time ever.

A lawyer for Kerkorian has said the billionaire corporate raider would be a passive investor in GM. But analysts say his history suggests otherwise and that he may seek to pressure GM's management to speed up a restructuring of the company.

Kerkorian's offer expired on the same day that GM Chairman and CEO Rick Wagoner, addressing shareholders at a contentious annual meeting, said GM expects to close more U.S. assembly and component plants over the next few years and slash at least 25,000 manufacturing jobs, as it battles high costs and shrinking market share.

Wagoner said GM expects to save $2.5 billion a year from the cost-cutting measures.

JPMorgan's Patel said Tracinda may raise its tender offer price for GM shares, since it was "undersubscribed by a relatively large degree."

Tracinda declined to comment or to say whether the octogenarian Kerkorian had been disappointed by the outcome of his bid.
Source

[MonaroSS]

Originally Posted by pupp1

Kerkorian ups stake in GM to 7.2 percent
Reuters / June 08, 2005

Kerkorian should offer to trade his share of GM for Holden and it's subsidiary Daewoo! Rick Wagoner just may accept to get him off their backs, and Kirk would make a profit from Holden.


.

[Snafu_SS]

i know this might sound stupid but uh.....is this good news??

im tottaly lost in all this economics stuff..thats a class in college i havent gotten too yet!!

[Stu]

Kerkorian will just dump all his debt on GM, and make matters worse!

[member12]

Kerkorian has publicly mentioned that he things GM should be more profitable. He is one of the brightest investors out there.

He purchased enough of Chryslers stock in 1992 to be on the board of directors- right before Chrysler started making tons of money and their stock went up more than 50%.

The bad part is that later Chrysler had to buy back his stock at a higher price to get rid of him.

My personal bet: He thinks he can make a difference by buying a place onto the board of directors, and knows GM is about to sell of GMAC.
no one really knows, though.

[IMPALAon20s]

Originally Posted by Snafu_SS

i know this might sound stupid but uh.....is this good news??

im tottaly lost in all this economics stuff..thats a class in college i havent gotten too yet!!

Kerkorian's history says this is a good thing. his background is gambling and hotels, and unsuccessful attempts to be a movie mogo (however you spell it).

Kerkorian isn't from any sort of mechanical industry, unless you count when he refurbished WWII airplanes and sold them to charter services.
he only started investing in auto companys when Lee Iococa urged him to. then when he realized some real profits once Chrsyler turned things around in late 90's, he tried to take over and wanted to put his own people in place. but that was unsuccessful.

when the diamlar/chrysler merger took place, knowing he would never be in control of DCX at that point, he unsuccesfully sued DCX over issue between weither merger was really more of a takeover. claiming losses in the millions.

although Kerkorian says his interest is only as an investor, and would not attempt to take over. his history says otherwise, IMO his ego wont like him sit in back and let someone else drive. IMO i see him as an uncreative, wannabe howard hughes.

dont get me wrong, GM needs changes up top, but not from Kerkorian.

[SJZ3]

I think this shows that GM shares were undervalued on the market at the time he made his offer, nothing more mysterious. In theory if GM was in as bad shape as everyone says, people would have just sold their stock to Kerkorian (until he hit his limit).

On an ongoing basis, it may be good to have someone with a vested interest in GM's well-being on their board. Institutional investors usually want short-term quarterly gains. A single person like Kerkorian would be more willing to wait for longer-term progress if he was confident in the management's ability to deliver, and thus there would be less pressure for GM to make dumb moves like rebadging minivans to eek out and additional 25k of unit sales.

[johnny smallblock]

Originally Posted by IMPALAon20s

and unsuccessful attempts to be a movie mogo (however you spell it).

Moguel

I don't view KK's involvement as a good thing. He is exactly what we have all been saying GM has too much of; non-car guys running things. His goal isn't to make better cars, improve market share, or make the Camaro (I know that got some of your attention). His goal is to make money and then get out, and he doesn't care what he remains of GM when he's done. If selling off GMAC will make him money, he'll force it. If selling Cadillac would make him money he'd try to do it. He is bad for GM, because he doesn't care about cars and he's not even going to pretend to.

[vxl]

Originally Posted by MonaroSS

Kerkorian should offer to trade his share of GM for Holden and it's subsidiary Daewoo! Rick Wagoner just may accept to get him off their backs, and Kirk would make a profit from Holden.


.

I'm assuming this is a joke. The purchase of Daewoo was probably the smartest moves GM has made since upping its stake in Suzuki. GM should inform its shareholders if assets are sold the proceeds are for corporate use (R&D etc) and not a special dividend. By the way - the fastest growing car company on the planet right now is Daewoo under its various guises.

[Globalist]

Originally Posted by Snafu_SS

i know this might sound stupid but uh.....is this good news??

im tottaly lost in all this economics stuff..thats a class in college i havent gotten too yet!!

Yes, it is good news in the sense that not everbody rushed to sell their GM shares, which in turn means that most people implicitly believe that the company will receover and the stock price will be much higher in the future.

[ChevroletRevived]

I think KK will be very good for GM and will help them restore to profitablility....I think someone who actually has money in the company will do a lot better of a job.but that's just my opinion...

[JVal14]

There's on sure thing in all this: the guy is tryig to make tons of cash. He could do it either of two ways: try to make a positive difference and help GM get back on it's feet, or bilk an ailing company out of the rest of it's money and drive it into the ground. What he'll really do is anyone's guess.

[LAMRONH]

Three cheers for Dr. Kirk Kervorkian!! Hip hip, hooray! Hip hip, hooray! Hip hip, hooray!

[timman]

Mogul

[SSrevolution]

Originally Posted by Stu

Kerkorian will just dump all his debt on GM, and make matters worse!

What are you talking about?