Kerkorian to boost stake in Ford

Detroit: Billionaire investor Kirk Kerkorian has taken aim at the No 2 US automaker, acquiring what could become a 5.6 per cent stake in Ford Motor Co through his investment vehicle Tracinda Corp.

Kerkorian, who previously held a nearly 10 per cent stake in General Motors Corp and made a failed bid for Chrysler LLC last year, began amassing Ford shares from April 2.

Tracinda holds 100 million Ford shares and announced yesterday that it planned a cash tender offer to acquire 20 million more shares, or about 1 per cent of the stock, at $8.50 per share, or a 13.3 per cent premium over Friday's close.

Ford shares and bonds shot higher after the announcement.

Tracinda said it had been following Ford closely since the automaker released fourth-quarter results in January and it believed the Michigan-based company was starting to achieve traction in its turnaround efforts.

That expectation was reinforced by Ford's announcement last week of a first-quarter profit that surprised Wall Street analysts at a time when US auto sales are slumping, he said.

Tracinda said it believes that Ford management, led by Chief Executive Alan Mulally, would continue to show significant improvements in financial results.

Ford said the Kerkorian investment represented an endorsement of its turnaround strategy and noted that anyone was free to acquire its shares on the open market.

"We welcome confidence in Ford and the progress we are making on our transformation plan," Ford Executive Chairman Bill Ford and Mulally said in a joint statement.

"The Ford team remains focused on executing our plan to transform Ford into a lean global enterprise delivering profitable growth for all," Ford and Mulally said.

The Ford family controls almost 40 per cent of the voting power at the automaker through a separate class of shares established when the company went public in 1956.

Ford lost $2.7 billion in 2007 and $12.6 billion in 2006. It has forecast a return to profitability in 2009 after slashing costs in the US market by cutting jobs and closing plants.

Kerkorian has a long record as an interventionist investor in Detroit and his ownership of GM stock came with a short stint by his adviser, Jerry York, serving on GM's board.

Kerkorian built up an almost 10 per cent stake in GM in 2005, a move that gave him leverage to place his representative, York, on the automaker's board.

Ford shares soared more than 10 per cent to $8.29 in early New York Stock Exchange trading. The shares have traded in a 52-week range of between $9.70 and $4.95.