Kerkorian Dumping GM for Vegas Action it Appears
/23/kerkorian-dumping-gm-for-vegas-action-it-appea rs/
November 23, 2006

New York (_eCanadaNow_ () ) – Billionaire Kirk
Kerkorian appears ready to up his anti in _Las Vegas_
( /23/kerkorian-dumping-gm-for-vegas-action-it-appea rs/#)
rather than trying to fix the problems with automobile giant General Motors
On Wednesday, Kerkorian’s company, Tracinda, said it was set to make an
offer to buy $825 million in MGM Mirage shares, while simultaneously selling off
a chunk of its GM stock, reducing its stake in the automaker from 9.9% to
7.4%. Analysts report that the move signals a lack of interest by the investor
in the pursuit of a proxy battle with GM, and the firm will likely continueto
dial down it’s investment in the struggling automaker.
News of the sale sent GM shares spiraling, closing with nearly a 5% loss
$31.09 on the New York Stock Exchange yesterday. GM’s shares had fallen about
10% in the previous week as Wall Street analysts expressed doubts about the
speed at which the company can achieve sustained profitability and recover
market share.
Kerkorian’s firm’s acquisition of MGM shares would boost his holding in the
casino/hotel company to almost 62%. In a regulatory filing, Tracinda said it
had agreed Monday to sell 14 million GM common shares in a private
transaction at a price of $33.
Kerkorian has been a _driving force_
( /23/kerkorian-dumping-gm-for-vegas-action-it-appea rs/#) behind a run-up in
GM’s shares this year, which reached a high of $36.56 in October, up from a
52-week low of $18.33 at the end of last year.
Kerkorian and his advisor, Jerry York, have been pressuring the auto giant
to speed up restructuring and cost cutting initiatives. York, who has often
criticized GM chairman and CEO G. Richard
Wagoner Jr., also sparked discussions between GM and Renault-Nissan that
would have created an extensive alliance among the three companies. Those talks
however, broke down in October and shortly after, York resigned his seat on GM
‘s board.
In the 45-day period that followed, Tracinda could not sell GM shares. That
prohibited period ended this week.
After the alliance discussions, York and some Renault executives openly
criticized GM for not taking the proposal seriously. That acrimony spurredsome
to think Tracinda would launch a proxy battle.
The sale `signals that he pretty much is going to go quietly into the night,’
said Kevin Reale, an automotive analyst at AMR Research.
Kerkorian, 89, responded to the end of alliance discussions by canceling
plans to buy 12 million more shares in GM, a move he was reportedly willing to
make when the potential alliance was still on the table.
Kerkorian first began amassing what became a $1.7 billion stake in GM in
April, 2005. He paid an average of just over $30 for the shares at the time.
Tracinda sold shares only once before this week. In December, Kerkorian sold 12
million shares for $252 million to show a loss for tax purposes and then
bought them back in January for $263 million.
——–
Copyright 2006 – _eCanadaNow _ ()