Capital Markets

Kerkorian Offers to Buy GM Stake

The financier and his investment firm, Tracinda Corp., recently lost a federal case regarding Chrysler's 1998 merger with Daimler Benz.
Stephen TaubMay 4, 2005

Secretive financier Kirk Kerkorian has offered to buy up to 28 million shares of General Motors Corp. for $31 apiece through his investment firm, Tracinda Corp.

This works out to a 13.43 percent premium to GM’s closing price on Tuesday.

Should the purchases be completed, Tracinda — in which Kerkorian is the sole shareholder — would own 8.84 percent of the automaker’s total outstanding shares.

In a press release, Tracinda said it became aware of rumors over the weekend concerning its possible purchase of shares of General Motors stock. “Since Tracinda’s acquisition of General Motors stock is solely for investment purposes, it decided to go forward with this tender offer to remove any uncertainty in the marketplace as to its investment intent.”

The firm added that shareholders will be entitled to retain the 50 cents per-share dividend expected to be paid in June.

Beverly Hills, California-based Tracinda is also the majority owner of casino and hotel operator MGM Mirage Inc. The firm’s previous forays into the auto industry have been less successful.

Tracinda, which owned 89 million shares of Chrysler Corp. before its 1998 merger with Daimler Benz, sued DaimlerChrysler in 2000. The firm charged that the automaker deceived Chrysler shareholders into believing that the 1998 combination was a merger of equals rather than the acquisition that Tracinda says it was, according to news accounts. Kerkorian also reportedly claimed that he should have gotten a 62 percent loss-of-control premium.

A federal judge ruled against Kerkorian last month; he has appealed.

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