Kerkorian launches tender offer for Ford shares

By David Bailey Reuters - Friday, May 9 06:26 pm

DETROIT (Reuters) - Billionaire investor Kirk Kerkorian on Friday launched a planned tender offer to add to a stake in Ford he called an "attractive investment," and not one he acquired to influence the automaker.

The cash tender offer for 20 million Ford shares through Kerkorian's Tracinda is priced at $8.50 and is scheduled to expire at 5 p.m. EDT (10 p.m. British time) on June 9 unless it is extended, Tracinda said in a statement.

Ford shares were down 10 cents, or 1.2 percent, at $8.10 in afternoon trading on the New York Stock Exchange.

Tracinda, of which Kerkorian is the sole investor, said it may propose business strategies for Ford depending on its evaluation of the automaker's business and other factors, and could acquire more shares after the tender offer.

"We are making our offer because we believe that the current management and leadership at Ford Motor Company and the pending execution of management's turnaround strategy make Ford Motor Company an attractive investment," Tracinda said in a filing with the U.S. Securities and Exchange Commission.

Ford, which has a plan that includes restructuring its North American operations to match production capacity with declining market share and to meet demand for smaller cars and crossovers, reported a surprise first-quarter profit.

Executive Chairman Bill Ford Jr. told shareholders during the automaker's annual meeting on Thursday the company welcomed Tracinda and thanked it for showing confidence in Ford's turnaround strategy.

In a short statement on Friday, the automaker advised stockholders to take no action in response to the offer. The Ford board plans to review the offer and advise stockholders of its position on the offer by May 22, it said.

On Tuesday, Bill Ford and a Tracinda representative discussed possible future meetings between Ford and Tracinda representatives, Tracinda said.

LONGTIME ACTIVIST INVESTOR

Kerkorian, a longtime activist investor in the U.S. auto industry, most recently held a nearly 10 percent stake in General Motors Corp and made an unsuccessful bid to acquire Chrysler in 2007.

Tracinda also signed a confidentiality agreement with Ford and made an offer to acquire Ford's Jaguar and Land Rover operations in July 2007, but did not make it into the second round of bidders, it said in the filing.

Ford has announced plans to sell Jaguar and Land Rover to Tata Motors .

Tracinda said it had "explored the possible infusion of additional capital" to support Ford's turnaround, but has no plans to seek an extraordinary transaction such as a merger, acquisition or sale of material Ford assets.

The investment vehicle is not seeking any changes to Ford's board or executive management or to Ford's current dividend policy, it said. Kerkorian adviser Jerry York had served briefly on GM's board when he held a stake in that car maker.

Kerkorian disclosed in late April that Tracinda had acquired 100 million shares of Ford at an average price of $6.91 starting in early April and had planned a tender offer to raise that stake to 120 million shares, or about 5.5 percent.

The offer price represents a 13.3 percent premium over Ford's closing stock price on the last day before Kerkorian disclosed his stake in Ford and the tender offer.

Kerkorian's pre-tender offer stake of 4.6 percent represents 2.8 percent of the voting power due to the Ford family's holdings of a separate class of shares established when the company went public in 1956.

The descendants of Ford founder Henry Ford control 40 percent of the voting power at the company through those shares. Each Ford family share carries 16 votes, while an ordinary share represents a single vote.

Tracinda, which had $9.3 billion (4.7 billion pounds) of assets as of April 30 and $9.1 billion of stockholder equity, will use an existing credit facility to fund the tender offer, it said.

(Reporting by David Bailey, editing by Brian Moss and Gerald E. McCormick)

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