Kerkorian ready for another gamble: Casino mogul takes shot at Chrysler
John Gallagher, Detroit Free Press – Michigan – KRTBN
Published: Apr 06, 2007
Kirk Kerkorian, part shark and part savior, is back.
Kerkorian’s 17-year duel with Detroit entered yet another stage
Thursday with the billionaire investor’s offer to buy Chrysler Group.
The offer could set up his third major encounter with Detroit
automakers.
The son of Armenian immigrants who ran a produce business in Fresno,
Calif., Kerkorian quit school as a teenager to go to work. He flew
military planes during World War II and after the war ran a small
air-charter service to ferry gamblers between Los Angeles and Las
Vegas.
Kerkorian paid $60,000 for the charter service in 1947 when he was
30. In 1968, he sold it to Trans-america Corp. for a little more than
$100 million. It was his first fortune, and a banker friend, Walter
Sharp, said much later that the transaction transformed Kerkorian.
"Kirk realized then that everything was in the timing," Sharp said in
1995. "He became fascinated with the idea of making deals."
With the proceeds of his airline sale, Kerkorian acquired the Flamingo
Hotel in Las Vegas in 1969. It was the first of several casino-hotels
he would buy, sell or build in the decades since.
For 20 years, his Tracinda Corp. has been the controlling shareholder
of what is now MGM Mirage, owner of the MGM Grand Detroit Casino and a
gaming company with a market value of almost $21 billion.
It was a meeting with former Chrysler Corp. boss Lee Iacocca that
sparked Kerkorian’s interest in Detroit. Meeting the then-automotive
executive at a Florida racetrack, Kerkorian agreed in 1990 to invest
in Chrysler.
Five years later, his stance as a passive investor gave way to a
takeover bid when the company didn’t perform as he’d hoped.
At the height of the controversy, Kerkorian was demanding three seats
on the board of directors, a prohibition on issuing new stock that
would dilute shareholders’ voting rights, and the right to buy more
Chrysler stock without penalty.
That bid ended when Kerkorian couldn’t stitch together a workable
deal.
Later, he was an early and avid supporter of the deal that saw
Daimler-Benz AG merge with Chrysler in 1998.
But pleasure turned to anger once again when Kerkorian came to believe
that the merger was really an ill-disguised takeover that devalued his
shares. He sued DaimlerChrysler AG in a bitter and protracted battle
that he ultimately lost.
He did make $2.7 billion on his stock.
Beginning in spring 2005, about the same time he lost his Chrysler
lawsuit, Kerkorian began buying shares of General Motors Corp. stock
and increasingly trying to exert his influence over the company. He
began to push GM management to make bigger changes, and in February
2006 got his aide, former Chrysler finance officer Jerome York,
elected to GM’s board of directors.
In his boldest move, Kerkorian pushed GM last July into considering a
three-way global alliance with Nissan Motor Co. and Renault SA. But
exploratory talks ended in October, with GM saying an alliance would
have provided more benefits for Renault-Nissan than for GM.
Disappointed, Kerkorian began to sell his GM shares. York resigned
from the GM board.
Although he sold his GM shares at a slight loss, when dividends were
included, Kerkorian apparently made a profit of about $112 million
before taxes and expenses on his $1.7-billion investment in GM.
By Nov. 30, Kerkorian had sold all his GM shares, and Detroiters
thought they might have seen their last of him.
Now’s he back.
Contact JOHN GALLAGHER at 313-222-5173 or [email protected]_
(mailto:gallagher@freepr ess.com) .
From: Emil Lazarian | Ararat NewsPress
