Tracinda:

Exhaust Note #9: Kerkorian is Back

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Tracinda Corporation Buying Into Ford Motor Company
Kirk Kerkorian, the incredibly wealthy 90-year-old investor and businessman, has long been well known among auto-industry watchers. He was first involved with Chrysler, back in the days when Lee Iacocca was turning things around. Later, his takeover attempt also sparked the notion of merging the company with another, which ultimately led to the creation of DaimlerChrysler. There are few today, other some who retired well off the deal, who would say that was a merger that was beneficial for either company, equals or not.
After eventually getting out of the Chrysler business, Tracinda bought enough of General Motors to get a seat on the board. Company man Jerry York held that seat and pushed for a GM-Renault-Nissan tie-up. Bound by duty to stockholders to explore the option instead of dismissing it outright, Rick Wagoner and GM staff worked with Renault-Nissan for a few months to prove what we all seemed to know in the first place: A Renault-GM tie-up didn’t make much sense. Kerkorian’s Tracinda sold off its GM stake and went home. The end of that story, right?

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Well, yes and no. Whether by the “third time’s a charm” or “try, try again” schools of thought, Tracinda has been accumulating shares of Ford Motor Company since April 2, 2008, and offered today to buy more. And by more we mean enough to give Tracinda 5.6% of FoMoCo. But what does Tracinda really want? Does the company want take over a Detroit car company, no matter which? It does seem that Kerkorian is obsessed with making a major, direct impact on the automotive industry. His efforts so far have succeeded in shaking things up, often when it can be most disruptive, but not in improving the business overall.


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GM, Renault, Nissan in Possible Tie-up

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The buzz around the global auto industry on Friday June 30 was that a possible tie-up between General Motors, Renault and Nissan was being seriously discussed by GM’s board. A meeting held on June 20 in Nashville (Nissan North America’s new headquarters) between Kirk Kerkorian, Jerry York and Carlos Ghosn explored possible relationships. Kerkorian’s Tracinda Corp. owns 9.9% of General Motors – the 4th largest shareholder – and Jerry York, Kerkorian’s right hand man, is Tracinda’s representative on GM’s Board. Carlos Ghosn is chairman of Renault and chairman of Nissan. Could he also become chairman of General Motors and then rule the auto world with 25% of the global market?
GM’s Board had a urgently called telephone conference on Friday to discuss the issue. No news yet.
General Motors Share Price Skyrockets
GM’s share price rocketed 8.6% on Friday on the news and skeptics opined that Kerkorian had orchestrated the news to win back the losses his investment in GM has taken over the past year. Others saw this as another wake-up call to Rick Wagoner that the restructuring of General Motors is not moving fast enough and that someone like Carlos Ghosn is needed to impersonally and analytically cut through the inertia that faces the General. Admittedly, Rick Wagoner has one of the toughest jobs on the planet and steering GM is like steering the Titanic. It cannot change direction quickly. But Ghosn demonstrated that you can turn around a huge ship – Japan’s second largest carmaker Nissan returned to profitability two years following Ghosn taking the helm.
Personalities, Personalities, Personalities
Think about the personalities. Wagoner the low-key professional chairman trying to improve the General incrementally. Bob Lutz the charismatic product czar of GM whose impact is just beginning to be seen in newly introduced products. Jerry York the impatient financial wizard from Chrysler/IBM/Tracinda who is delving into GM’s operations. Kerkorian the “long term investor” trying to make a risky investment a sure thing. Carlos Ghosn another charismatic exec credited singlehandedly with saving Nissan. Wow! This is fun!
Don’t Forget China
Oh, don’t forget. GM has a solid presence in China and Renault and Nissan much less so. This tie up could really benefit Renault and Nissan in China.
Stay Tuned
Stay tuned. This will play out quickly over the next week or so. Is Kerkorian just playing with his share price? Is he really able to goose GM into accelerating its restructuring? Will any sort of relationship develop between GM/Renault/Nissan? Between Wagoner/Lutz/Kerkorian/York/Ghosn?


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