Kerkorian goes after Ford
06-15-2008 | 03:51 PM
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Kerkorian goes after Ford
INVESTOR Kirk Kerkorian will meet top executives at Ford Motor Co next week as a way to show his support for management and its turnaround strategy, inside sources say.
Kerkorian, whose investment firm Tracinda Corp has built a 5.6% stake in Ford, is scheduled to meet executive chairman William Ford jnr and chief executive Alan Mulally in Los Angeles.
The meeting follows a tender offer that Tracinda completed on Friday to acquire 20 million Ford shares for $US170 million ($A181.2 million), in addition to the 100 million shares it has bought since April.
In regulatory filings, Kerkorian has praised the strategic direction and prospects for Ford under Mulally.
The meeting is probably meant to assure Mulally and William Ford that the billionaire, 91, has no plans to try to wrest control of Detroit's second-biggest vehicle maker.
The meeting will probably take place under delicate ground rules.
With ownership of more than 5% of Ford, Tracinda is considered a major shareholder. So any discussion of Kerkorian's investment plans would require immediate disclosure in regulatory filings.
The Ford executives, for their part, would be unable to discuss strategic initiatives that have not been made public to other shareholders.
Given previous efforts to influence management at General Motors and Chrysler, Kerkorian appears determined to be welcomed as a friendly investor at Ford Motor.
One analyst said Kerkorian and his top adviser, Jerome York, could not afford to have their actions interpreted as hostile.
"They are value investors who seek to influence the course of events," said John Casesa, managing partner of the Casesa Shapiro Group in New York. "This is a long process to create value. Providing support to management is a big part of that."
Tracinda spokeswoman Winnie Lerner declined to comment on the meeting.
Ford Motor also declined to confirm the meeting, but spokesman Mark Truby said on Friday that Ford would treat Tracinda as it would any large shareholder.
"We are open to meeting with Tracinda as we would be with any large investor," Truby said. "However, we would keep any discussion private."
The meeting comes as Ford faces setbacks in its turnaround plans after losing a combined $US15.3 billion in 2006 and 2007.
After reporting a surprising $US100 million profit in the first quarter, Ford Motor said in May that rising petrol prices had crippled sales of its utilities and big sport utility vehicles and forced it to abandon its goal of full-year profitability by 2009.
Instead, Ford will slash production of its largest vehicles by up to 15% and increase its output of more fuel-efficient cars and crossovers.
On Friday, Ford executives met plant managers and union leaders in Detroit to warn of more cuts on the factory floor.
At the meeting, Ford's global manufacturing chief, Joe Hinrichs, did not share Ford's plans to shift manufacturing resources from trucks to cars, but he said the company needed workers to be aware of the "critical business environment".
Ford is expected to announce in July which North American utility and SUV plants may be made idle or operate at reduced capacity.
The struggles in the marketplace have not deterred Kerkorian in his push to build a major stake in Ford. Tracinda began its $US8.50-a-share tender offer on May 9 when Ford's shares were trading at $US8.20. But when Ford's stock fell below $US7, Tracinda declined to lower the price or withdraw its tender offer.
The gesture was seen as a sign of Kerkorian's confidence in Ford management, and his longer-term view of the company's prospects.
Tracinda said on Friday that 826 million shares were tendered in the offer, of which Tracinda would acquire 20 million.
Overall, Kerkorian will have spent $US861 million to acquire his 5.6% stake. With Ford's shares closing at $US6.27 on Friday, the stake is worth $US752 million.
Kerkorian made his fortune in casinos and movies, but has had mixed results in his forays in the vehicle industry.
In 1995, he started an unsuccessful takeover attempt of Chrysler, but his influence on management led to the company's merger in 1998 with the German vehicle maker Daimler-Benz.
In 2006, Kerkorian amassed a large stake in General Motors, but failed to persuade chairman Rick Wagoner to join an alliance with Nissan Motor of Japan and French car maker Renault.
The presence of William Ford, a great-grandson of founder Henry Ford, in the forthcoming talks is important for Kerkorian.
While he is an executive chairman, William Ford also represents Ford family members, who control 40% of shareholder votes through a special class of stock. Any effort by Kerkorian to suggest changes at Ford Motor would most likely require the support of the family.
Kerkorian, whose investment firm Tracinda Corp has built a 5.6% stake in Ford, is scheduled to meet executive chairman William Ford jnr and chief executive Alan Mulally in Los Angeles.
The meeting follows a tender offer that Tracinda completed on Friday to acquire 20 million Ford shares for $US170 million ($A181.2 million), in addition to the 100 million shares it has bought since April.
In regulatory filings, Kerkorian has praised the strategic direction and prospects for Ford under Mulally.
The meeting is probably meant to assure Mulally and William Ford that the billionaire, 91, has no plans to try to wrest control of Detroit's second-biggest vehicle maker.
The meeting will probably take place under delicate ground rules.
With ownership of more than 5% of Ford, Tracinda is considered a major shareholder. So any discussion of Kerkorian's investment plans would require immediate disclosure in regulatory filings.
The Ford executives, for their part, would be unable to discuss strategic initiatives that have not been made public to other shareholders.
Given previous efforts to influence management at General Motors and Chrysler, Kerkorian appears determined to be welcomed as a friendly investor at Ford Motor.
One analyst said Kerkorian and his top adviser, Jerome York, could not afford to have their actions interpreted as hostile.
"They are value investors who seek to influence the course of events," said John Casesa, managing partner of the Casesa Shapiro Group in New York. "This is a long process to create value. Providing support to management is a big part of that."
Tracinda spokeswoman Winnie Lerner declined to comment on the meeting.
Ford Motor also declined to confirm the meeting, but spokesman Mark Truby said on Friday that Ford would treat Tracinda as it would any large shareholder.
"We are open to meeting with Tracinda as we would be with any large investor," Truby said. "However, we would keep any discussion private."
The meeting comes as Ford faces setbacks in its turnaround plans after losing a combined $US15.3 billion in 2006 and 2007.
After reporting a surprising $US100 million profit in the first quarter, Ford Motor said in May that rising petrol prices had crippled sales of its utilities and big sport utility vehicles and forced it to abandon its goal of full-year profitability by 2009.
Instead, Ford will slash production of its largest vehicles by up to 15% and increase its output of more fuel-efficient cars and crossovers.
On Friday, Ford executives met plant managers and union leaders in Detroit to warn of more cuts on the factory floor.
At the meeting, Ford's global manufacturing chief, Joe Hinrichs, did not share Ford's plans to shift manufacturing resources from trucks to cars, but he said the company needed workers to be aware of the "critical business environment".
Ford is expected to announce in July which North American utility and SUV plants may be made idle or operate at reduced capacity.
The struggles in the marketplace have not deterred Kerkorian in his push to build a major stake in Ford. Tracinda began its $US8.50-a-share tender offer on May 9 when Ford's shares were trading at $US8.20. But when Ford's stock fell below $US7, Tracinda declined to lower the price or withdraw its tender offer.
The gesture was seen as a sign of Kerkorian's confidence in Ford management, and his longer-term view of the company's prospects.
Tracinda said on Friday that 826 million shares were tendered in the offer, of which Tracinda would acquire 20 million.
Overall, Kerkorian will have spent $US861 million to acquire his 5.6% stake. With Ford's shares closing at $US6.27 on Friday, the stake is worth $US752 million.
Kerkorian made his fortune in casinos and movies, but has had mixed results in his forays in the vehicle industry.
In 1995, he started an unsuccessful takeover attempt of Chrysler, but his influence on management led to the company's merger in 1998 with the German vehicle maker Daimler-Benz.
In 2006, Kerkorian amassed a large stake in General Motors, but failed to persuade chairman Rick Wagoner to join an alliance with Nissan Motor of Japan and French car maker Renault.
The presence of William Ford, a great-grandson of founder Henry Ford, in the forthcoming talks is important for Kerkorian.
While he is an executive chairman, William Ford also represents Ford family members, who control 40% of shareholder votes through a special class of stock. Any effort by Kerkorian to suggest changes at Ford Motor would most likely require the support of the family.
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