MGM Mirage Owner Buys Ford Motor Ownership Stake
MGM Mirage owner Kirk Kerkorian anounced today his investment company Tracinda had acquired 4.7% ownership in Ford Motor Company. Tracinda, named after Kerkorian's daughters Tracy and Linda, is the majority owner of MGM Mirage and its casino holdings worldwide.
Kerkorian also stated an offer for another 20 million shares at $8.50 each. This purchase, if completed, would give Tracinda control of 5.6% of Ford stock. Any investor owning more than 5%of a publicly traded company is required to file with the the U.S. Securities and Exchange Commission.
Rumors floated throughout Wall Street today on speculation as to Kerkorian's purpose. Although the Ford family only owns 4% of the stock, they still control 40% of the voting rights, rendering a takeover problematic.
Kerkorian has previously been heavily involved in the other major U.S. auto manufacturers. He was the majority stock holder in Chrsyler at the time of the 1998 merger with DaimlerBenz, an event that led to Kerkorian filing an unsuceesful lawsuit. He owned 10% of General Motors, stock he dumped after rejection of his proposal to merge with Nissan Motor Co. and Renault SA. And he unsucessfully bid to take over Chrsyler in 2006.
Ford shares rose from a Friday close at $7.50 to a Monday close at $8.21 in response to the news. Analysts feel that the investment is a sound one; Ford recently reported a surprise profit of $100 million over the first quarter. It was Ford's first profitable quarter in nearly a year, and showed that Chief Executive Officer Alan Mulally's plan to turn Ford around seems to be working.
Kerkorian is the man credited with forcing Steve Wynn out of the Mirage Hotel and Casino. While MGM Mirage stocks have dwindled recently, industry experts still cite the company as having strong growth potential. MGM establishing itself in Macau before the decision last week to stop issuing gaming licenses is considered a huge advantage, and Las Vegas expansions continue apace.
Kerkorian may plan on agitating the Ford family toward a merger or other bold moves, but one thing should be clear. Even as the 90-year-old billionaire continues to take unusual risks, his fortune always seems to grow.
