Kerkorian cuts GM stake, shifts to MGM

A billionaire investor, Kirk Kerkorian on Wednesday said that he had sold 14 million shares of $462 million worth in General Motors Corp after the automaker refused to support his alliance talks with Renault SA and Nissan Motor Co.

Kerkorian, president and CEO of his private holding company, Tracinda Corporation, last month had tried to engineer a global alliance of the world’s largest automaker with Renault SA and Nissan Motor Co, both run by savvy chief executive Carlos Ghosn, in hopes that alliance could help GM reverse the course of its failing business.

But, GM chief executive Rick Wagoner had refused to back the alliance.

Tracinda’s yesterday’s share sale is viewed by the analysts as aftermaths of the rejection of that alliance by the US auto giant. “The Nissan-Renault outcome had to be a disappointment, and Kerkorian may be deciding to scale back his activist efforts,” said John Novak, an analyst from Morningstar Inc.

After selling its 25 percent stake at 33 dollars per share in the automaker, the Beverly Hills, California-based investment firm has reduced itself to the fourth-largest shareholder with 7.4 percent, down from 9.9 percent.

On the same day, Kerkorian also announced a tender offer for $825 million of stock in MGM Mirage Inc. He offered to buy additional 15 million shares in the hotel and casino operator at $55 per share, increasing his stake in the gambling giant to almost 62 percent from 56.3 per cent.

In a press release yesterday a representative of Tracinda said, "This tender offer demonstrates our confidence in MGM Mirage and its management and our commitment to the company's future."

Kerkorian, 89, who had once indicated that he wants to lift his stake in GM to 12 per cent, with the announcement of his dual moves triggered speculations that he now wants to stay away from the prolonged fight for control of GM's board.

Kerkorian was upset from the time GM board ended discussions with French automaker Renault and its Japanese partner Nissan for the alliance. Kerkorian aide Jerry York also resigned from the GM board at that time.

According to a filing with the Securities and Exchange Commission Wednesday, the transaction between Tracinda and GM will be settled on Nov. 24.

Shares of GM fell 4.66 per cent or $1.52 cents to 31.09 dollars in afternoon trading on Wall Street Wednesday, while shares of MGM duly jumped 10.6%, or $5. 21 to $54.21.