Kerkorian launches tender offer for Ford shares

By David Bailey Reuters - Friday, May 9 09:55 pm

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

Just how passive the long-time activist investor in the U.S. auto industry will stay remained unclear.

Kerkorian said through his Tracinda that he may propose business strategies for Ford depending on his 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.

Kerkorian most recently held a nearly 10 percent stake in General Motors and made an unsuccessful bid to acquire Chrysler in 2007.

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

Tracinda on April 28 disclosed it had acquired 100 million shares of Ford at an average price of $6.91 starting April 2 and planned to buy more. The tender offer would raise the stake to about 5.5 percent.

Ford shares closed Friday down 10 cents, or 1.2 percent lower, to $8.10 on the New York Stock Exchange.

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 that 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 by May 22, it said.

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.

TRACINDA BID ON JAGUAR, LAND ROVER

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

The Tracinda filing disclosed previous inquiries into Ford in mid 2007 and that contacts between representatives of the automaker and Tracinda continued this week.

Tracinda had submitted an offer to acquire Ford's Jaguar and Land Rover luxury brands in mid 2007, but did not make it into the second round of bidders, according to its filing. Ford is selling Jaguar and Land Rover to Tata Motors Ltd .

The contact continued in April, when York told Ford Chief Executive Alan Mulally and Chief Financial Officer Don Leclair in a meeting on April 4 that Tracinda had an interest in investing in Ford, according to the filing.

In response to questions about the statement, Ford said Mulally and Leclair thought York's remark was "off-the-cuff," Ford did not know Tracinda had already begun investing and was unaware of it until notified the weekend of April 26 and 27.

There have been contacts since late April as well.

Tracinda said York apologized on May 2 for "off-the-cuff" remarks in an interview with Automotive News in which he said he would expect Ford to look to sell its Volvo and Mercury brands, possibly putting Volvo up for sale within a year.

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

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.

(Reporting by David Bailey, editing by Brian Moss and Tim Dobbyn)

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