Kerkorian boosts stake in Ford to 6.5%

Members of the media film a Ford Flex just off the assembly line at the Ford Motor Co. factory in Ontario, Canada. Ford will boost production there by about 19 percent next year. (Norm Betts/Bloomberg News)

SOUTHFIELD, Mich. - Billionaire investor Kirk Kerkorian's Tracinda Corp. bought 40.8 million more Ford Motor Co. shares to build his stake to 6.5 percent, increasing his bet that the second-biggest US-based automaker can be revived.

Tracinda's new shares were valued at $253.8 million, based on yesterday's closing price. The latest purchases consist of 20 million shares acquired in a tender offer and 20.8 million more bought since Monday, Tracinda reported yesterday.

The disclosure comes two days after representatives of Tracinda met with chief executive Alan Mulally and chairman William Clay Ford Jr. Kerkorian has backed Mulally's plan to stem losses of $15.3 billion in the past two years.

"If he's reading Ford and Mulally like I am, he's making a good investment," said Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Mich. "He's buying on the cheap. Ford is going to be around."

Kerkorian, 91, disclosed in late April that he had acquired 100 million shares. The purchases reported yesterday brought his stake to 140.8 million shares and make him the fourth-largest shareholder at Ford, according to data compiled by Bloomberg.

His support so far for Mulally contrasts with his clashes with management when he owned shares of the former Chrysler Corp. and General Motors Corp. Through Tracinda, the Las Vegas-based investor made a hostile bid for Chrysler in 1995 and pressed for major changes at GM a decade later.

Ford rose 10 cents to $6.32 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have slumped 27 percent in the past year.

Documents that Tracinda filed repeated previous statements that Tracinda may propose business strategies for Ford and has studied ways of injecting more capital into Ford, without providing specifics.

Mulally began putting his turnaround in place shortly after joining Ford. In 2006, the automaker borrowed $23.4 billion to finance plant closings and job cuts. "We stress-tested the business plan to make sure that we had enough liquidity, and we're in good shape," Mulally said earlier this month.