Kirk Kerkorian, who shook up Chrysler Corp. with a hostile takeover bid a decade ago, disclosed he is building an 8.8 percent stake in General Motors Corp., sending GM shares to their biggest gain in more than 40 years.
Kerkorian's Tracinda Corp. yesterday said it holds 22 million shares of GM and will buy 28 million more at $31 each. Kerkorian, who is buying the stock after a 42 percent decline in the past year, is making a "strictly passive" investment in GM, his attorney Terry Christensen said.
Kerkorian, 87, may push for changes at the world's biggest automaker after its U.S. market share fell to an 80-year low and it reported a $1.1 billion first-quarter loss. Chief executive G. Richard Wagoner Jr. must now contend with the specter of an activist Kerkorian while trying to rebuild sales, develop better vehicles and wrest health care concessions from U.S. workers.
After Kerkorian bought shares in Chrysler starting in 1990, he pressured the automaker to increase its dividend, buy back shares and add a Tracinda employee to the board.
"Mr. Kerkorian comes to the table here with no agenda and no proposals to make and just has faith that this company is going to exert itself as the strong company that it is," Christensen said. GM spokesman Tom Kowaleski declined to comment.
GM stock climbed $5.03, or 18 percent, to $32.80, its biggest jump since at least 1961.
The purchase of 50 million shares would make Kerkorian GM's third-largest shareholder, according to data compiled by Bloomberg. His current stake represents about 3.89 percent of the company.
Tracinda holds a controlling interest in casino operator MGM Mirage. Kerkorian is ranked 41st on the Forbes list of the world's wealthiest people, with a net worth estimated at $8.9 billion.
Tracinda said it disclosed the GM investment as a tender offer in response to rumors of the transaction that circulated over the weekend.
