Kerkorian discloses 4.7% Ford investment

Billionaire to buy 20m more shares

SOUTHFIELD, Mich. - Investor Kirk Kerkorian said he bought 100 million Ford Motor Co. shares, or 4.7 percent, and intends to buy more in a vote of support for chief executive Alan Mulally. Ford rose nearly 10 percent in New York trading.

The 90-year-old billionaire paid about $691 million so far and plans to spend an additional $170 million. Kerkorian's Tracinda Corp. said the second-largest US automaker is "starting to achieve highly meaningful traction in its turnaround efforts." Mulally said Ford welcomes the investment.

The offer of $8.50 a share for another 20 million shares reflects confidence in Ford's progress after it narrowed losses by 50 percent in the fourth quarter of last year, Tracinda said. The initial investment was made April 2, three weeks before Dearborn, Mich.-based Ford reported a $100 million first-quarter profit that surprised analysts.

"This shows a lot of faith in the revival of the company," Dan Poole, senior vice president of equity research at National City Corp. in Cleveland said in an interview.

Three years ago, Tracinda described its first purchase of General Motors Corp. shares as "strictly passive" and voiced support for management. Kerkorian later built his stake as high as 9.9 percent as he stepped up pressure on chief executive Rick Wagoner to take bold action to transform the world's largest automaker. Tracinda didn't characterize its intentions with Ford.

"It's hard to know what Kerkorian's motives are," said Maryann Keller, an independent auto analyst based in Greenwich, Conn. "Is he making a passive investment? His style is to buy and stir the pot."

Ford gained 71 cents to $8.21 in New York Stock Exchange trading.

"We welcome confidence in Ford and the progress we are making on our transformational plan," Mulally and chairman William Clay Ford Jr. said in an e-mailed statement.

Tracinda bought the initial 100 million shares at an average price of about $6.91 per share, making Kerkorian Ford's fourth-biggest shareholder, according to Bloomberg data. At $8.50 a share for the additional 20 million shares, the investment company would pay a 13.3 percent premium over the $7.50 April 25 closing price.

In 1995, Kerkorian made an unsuccessful takeover bid for Chrysler Corp. In May 2005, he disclosed his initial stake in GM and became the biggest individual shareholder.

Kerkorian pressured GM to put his adviser Jerry York on the automaker's board. Kerkorian then urged Wagoner to seek an alliance with Carlos Ghosn's Renault SA and Nissan Motor Co. York quit the board and Kerkorian later sold his GM stock after Wagoner decided to remain independent.

Tracinda hasn't asked for a board seat, Ford spokesman Mark Truby said in an e-mail.

Tracinda spokesman Tom Johnson said the company had no comment beyond the statement.