Kerkorian offers to buy 20 million shares of Ford stock
 

Price: $8.50; Kerkorian would own 5.6% of automaker

Automotive News | April 28, 2008 - 8:35 am EST

NEW YORK (Reuters) – Kirk Kerkorian’s Tracinda Corp said today it intends to make a cash tender offer for up to 20 million shares of Ford Motor Co. at a price of $8.50 per share.

The offer price represents a 13.3 percent premium over Ford’s closing price of $7.50 on Friday, April 25, and the news sent Ford shares up 8 percent in premarket trading.

On completion of the offer, Tracinda would own 120 million shares of Ford common stock, or about 5.6 percent of the total outstanding.

Ford released a statement this morning from Chairman Bill Ford and CEO Alan Mulally:

“We welcome confidence in Ford and the progress we are making on our transformation plan. Any investor can purchase Ford shares, which are sold on the open market. The Ford team remains focused on executing our plan to transform Ford into a lean global enterprise delivering profitable growth for all.”

Tracinda said it has been following Ford closely and has noted that the automaker is starting to achieve traction in its turnaround efforts.

Morgan Stanley analyst Jonathan Steinmetz wrote in a report today that Tracinda is likely to modify its traditional activist behavior because of the Ford family’s control over the automaker’s voting shares.

"Something will have to give," Steinmetz said in a research note. "In this case, we believe Tracinda is unlikely to be activist in the conventional sense given the voting structure."

Instead, Tracinda is likely to be a "constructive agitator" and could ultimately push for a seat on Ford’s board of directors, the analyst said. Kerkorian representative Jerry York would be the likely candidate to hold any board seat allocated to Tracinda.

Tracinda has not asked about putting a representative on the Ford board, a Ford spokesman said. He declined to comment on whether Ford would be willing to add a such a board seat.

At least three other shareholders have more common stock in Ford than Tracinda now does.

The Ford family controls the company through special Class B shares with super voting power. The family owns 70,852,076 Class B shares. The Class B stock gives the family 40 percent of the shareholder vote.

Last week Ford surprised Wall Street by posting a quarterly profit, led by strong results in Europe and a sharply narrower loss in North America.

Tracinda said it believes that Ford management, led by Mulally, will continue to show significant improvements in results going forward.

Last year Kerkorian made a bid to buy U.S. automaker Chrysler but lost out to private equity firm Cerberus Capital Management.

The billionaire investor held a 9.9 percent stake in General Motors at one time but sold that stake in 2006, when GM rejected his proposed tie-up with Nissan Motor Co. and Renault.

Ford shares jumped 9.2 percent in morning market activity, trading at $8.18 a share at 11:09 a.m. EDT.

The stock shot up 11.7 percent on Thursday after the first quarter profit report, but then gave all that gain back on Friday. The shares have traded in a 52-week range of $9.70 to $4.95.

Amy Wilson contributed to this report

PRESS RELEASE: Tracinda Announces Tender Offer for 20,000,000 Shares of Common Stock of Ford Motor Co.

LOS ANGELES–(BUSINESS WIRE)–Tracinda Corporation today announced that it intends to make a cash tender offer for up to 20,000,000 shares of common stock of Ford Motor Company (NYSE: F) at a price of $8.50 per share. The offer price represents a 13.3% premium over Ford’s closing stock price of $7.50 on April 25, 2008 and a 38.7% premium over Ford’s closing stock price on April 2, 2008, the day upon which Tracinda began accumulating shares in the company.

The shares to be purchased pursuant to the offer represent approximately 1% of the outstanding shares of Ford Motor Company common stock. Tracinda Corporation, of which Kirk Kerkorian is the sole shareholder, currently owns 100,000,000 shares of Ford common stock, which represents approximately 4.7% of the outstanding shares. Tracinda’s average cost for such shares is approximately $6.91 per share. Upon completion of the offer, Tracinda would beneficially own 120,000,000 shares of Ford common stock, or approximately 5.6% of the outstanding shares.

Tracinda has been following Ford closely since the company released its fourth quarter 2007 results which indicated that Ford’s management was starting to achieve highly meaningful traction in its turnaround efforts. Last week this was reinforced by Ford’s first quarter 2008 results, achieved despite the difficult U.S. economic environment. Tracinda believes that Ford management under the leadership of Chief Executive Officer Alan Mulally will continue to show significant improvements in its results going forward.

Once the tender offer is commenced, offering materials will be mailed to Ford stockholders and filed with the Securities and Exchange Commission. Ford stockholders are urged to read the offering materials when they become available because they will contain important information.

The tender offer will be subject to customary conditions for transactions of this type, including expiration of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Tracinda’s offer will not be subject to financing.

Kirk Kerkorian