Ford shares rise as Kerkorian buying more stake

By David Bailey

DETROIT (Reuters) - Billionaire Kirk Kerkorian, a veteran investor in the troubled U.S. auto industry, has taken aim at Ford Motor Co (F.N), looking to acquire a stake of 5.6 percent stake through his investment vehicle Tracinda Corp.

Kerkorian, 90, who previously held a nearly 10 percent stake in General Motors Corp (GM.N) and made a failed bid for Chrysler LLC last year, began amassing shares of Ford, the No. 2 U.S. automaker, on April 2.

Analysts were left to speculate on what Kerkorian's "end-game" would be for the investment and whether he would push for additional asset sales by Ford, which has agreed to sell Jaguar Land Rover to Tata Motors Ltd (TAMO.BO).

Tracinda said on Monday it already holds 100 million Ford shares, or about 4.7 percent, and plans a cash tender offer to acquire 20 million more shares, or nearly 1 percent of the stock, at $8.50 per share.

The tender offer represented a 13.3 percent premium over Friday's close and Ford shares rose 9.5 percent Monday.

Tracinda said it had been following Ford with interest since the start of the year and noted that the automaker posted a surprise first-quarter profit last week at a time when U.S. auto sales are slumping.

It said it believes that Ford management, led by Chief Executive Alan Mulally, would continue to show significant improvements in financial results.

Ford said the Kerkorian investment represented an endorsement of its turnaround strategy.

"We welcome confidence in Ford and the progress we are making on our transformation plan," Ford Executive Chairman Bill Ford and Mulally said in a joint statement.

The Ford family controls almost 40 percent of the voting power at the automaker through a separate class of shares established when the company went public in 1956.

Ford lost $2.7 billion in 2007 and $12.6 billion in 2006. It has forecast a return to profitability in 2009 after slashing costs in the U.S. by cutting jobs and closing plants.

Kerkorian has a long record as an interventionist investor in Detroit and his ownership of GM stock came with a short stint by his adviser, Jerry York, serving on GM's board.

York met in early April with Mulally and Ford Chief Financial Officer Don Leclair at Ford headquarters in Dearborn, Michigan, Ford spokesman Mark Truby said. York had requested a meeting with Mulally in 2007, he said.

KERKORIAN ADVISER MET WITH FORD

The meeting occurred after April 2, when Tracinda said it had begun to build its stake in Ford. The automaker did not learn of the investment until the past weekend, Truby said.