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GM stock up as Kerkorian confirms offer for 28 million shares

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  • GM stock up as Kerkorian confirms offer for 28 million shares

    GM stock up as Kerkorian confirms offer for 28 million shares

    By DEE-ANN DURBIN
    .c The Associated Press


    DETROIT (AP) - Billionaire investor Kirk Kerkorian went ahead Monday
    with an offer to buy up to 28 million GM shares - a bid that would
    roughly double his stake in the automaker - despite last week's
    downgrade of GM debt to ``junk'' status. Shares of the world's largest
    automaker rose slightly.

    Kerkorian's investment company, Tracinda Corp., is offering about $870
    million, or $31 per share, according to documents filed with the
    U.S. Securities and Exchange Commission. If all 28 million shares are
    purchased, Kerkorian would own 8.84 percent of GM's shares, or a total
    of 50 million. The offer is set to expire June 7, the day of GM's
    annual meeting in Wilmington, Del.

    Shares of General Motors Corp. closed up 57 cents, or 1.9 percent, to
    $31.33 Monday on the New York Stock Exchange. The shares rose another
    58 cents in after-hours trading.

    GM's stock price soared 18 percent last week when Kerkorian announced
    his plan, but the shares tumbled the next day when Standard & Poor's
    Ratings Services downgraded GM's debt to below investment grade. GM
    shares fell 10 cents Friday to close at $30.76.

    GM said Monday it will review Kerkorian's offer and file comments with
    the SEC by May 20, as required by law.

    In its filing, Tracinda insisted it is acquiring the shares for
    investment purposes only and does not intend to acquire or influence
    control over GM's business. But Kerkorian has never been known as a
    passive investor. The 87-year-old is in the middle of a five-year
    legal battle over terms of the 1998 merger of Daimler-Benz AG and
    Chrysler Corp. that formed DaimlerChrysler AG. Kerkorian was a major
    Chrysler shareholder.

    ``Unless he sees the money come in pretty quickly, he will become
    irritating,'' said Gerald Meyers, a former chairman of American Motors
    Corp. who now teaches at the University of Michigan. ``Everybody feels
    somewhat defeated by this turn of events. It's a sad day for GM that
    this guy has come after them.''

    Meyers added it is not surprising Kerkorian went ahead with his offer
    despite the S&P downgrade.

    ``He's really committed,'' Meyers said. ``He has a track record, and
    when he decides to go after something, he goes after it.''

    Tracinda did not address the downgrade in its statement Monday. A
    telephone message was left with a Tracinda spokeswoman seeking
    comment. Beverly Hills, Calif.-based Tracinda is the majority owner of
    casino and hotel operator MGM Mirage Inc.

    Some analysts have suggested Kerkorian's presence could light a fire
    under the struggling automaker. GM shares fell to a 10-year low in
    April after the company reported a $1.1 billion loss for the first
    quarter.

    GM may be seeking some relief by increasing its hybrid vehicle
    offerings, though it denied an online news report that it is in talks
    with Toyota Motor Corp. about a technology-sharing agreement. Toyota
    also denied Monday that the two companies are in talks, although the
    Japanese automaker said it is willing to discuss such a partnership.

    GM also is trying to beef up its investments in growing markets. The
    company said Monday it will invest $20 million this year to enhance
    its assembly operations in Venezuela, where it has 31 percent market
    share. By contrast, GM's U.S. market share was 25.4 percent for the
    first four months of this year, down from 27 percent a year earlier.

    On the Net:

    General Motors Corp., http://www.gm.com



    05/09/05 17:52 EDT

    From: Emil Lazarian | Ararat NewsPress
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