Ford: We were surprised by Kerkorian investment

Buying up small blocks of stock, billionaire investor Kirk Kerkorian quietly accumulated millions of shares of Ford Motor Co. in a series of purchases in April that left the automaker "completely unaware" of his involvement until later in the month.

Kerkorian's Tracinda Corp. on Friday launched his previously announced $170 million cash offer to buy an additional 20 million shares of Ford as new details emerged about how he bought 100 million shares of the company _ about a 4.7 percent ownership stake _ without notice.

In a government filing, Tracinda outlined an April 4 meeting between Ford Chief Executive Officer Alan Mulally, Chief Financial Officer Don Leclair and Jerry York, a top Kerkorian adviser.

During the meeting, York told Mulally and Leclair that "Tracinda had an interest in investing in Ford," according to the Securities and Exchange Commission filing. Ford said in a statement that York "made what we thought was an off-the-cuff remark that Tracinda might be interested in investing in Ford."

Company officials said they did not know at the time that Tracinda had begun buying Ford stock on April 2 and "we were completely unaware of Tracinda's investment until the weekend of April 26 and 27." Chairman Bill Ford "was as surprised as" Mulally and Leclair when he learned about the investment during that same weekend.

According to Tracinda's disclosure, Kerkorian's team had already racked up at least 6.95 million shares of Ford by the April 4 meeting. Tracinda bought no more than 827,347 shares at a time _ some buys were made in blocks of 100 or 200 shares _ allowing them to avoid detection during two days when nearly 133 million Ford shares changed hands.

During the month, Tracinda steadily increased its Ford holdings with dozens of relatively small stock purchases. With Kerkorian's tender offer on Friday, he hopes to boost his ownership to about 5.5 percent of Ford.

Tracinda said the offer at $8.50 per share runs until June 9, unless it is extended.

Ford's board of directors advised its stockholders on Friday to "take no action at this time" while it considers Tracinda's offer and plans to advise shareholders on it by May 22.

Kerkorian's investment company said it was making the offer "because it believes Ford is an attractive investment. It does not have a present intent to acquire or influence control over the business of Ford."

Gerald Meyers, a former chairman of American Motors Corp. who now teaches leadership at the University of Michigan, said Tracinda's statement underscores its support for Ford's management. But if the company encounters problems, "the threat is there to make life very uncomfortable."

Ford shares slipped 10 cents to close at $8.10. The $8.50 price is a 13.3 percent premium over Ford's closing price before Kerkorian announced the offer last month.

The Tracinda filing also notes that York had discussed Tracinda's interest in buying Jaguar and Land Rover from Ford and the investment company made an offer in July 2007.

Ford officials told York that Tracinda would not be included in a second round of bidders. The Jaguar and Land Rover brands were sold in March to India-based Tata Motors Ltd. for $2.3 billion, a third of the original purchase price.

During the company's annual meeting Thursday, Bill Ford praised Mulally's leadership of the company and said they "welcome Tracinda and thank them for their confidence in our plan."

Mulally and Ford leaders have been working to return Ford to profitability by 2009 and have been encouraged by the company's surprise $100 million profit during the first quarter of this year following losses of $2.7 billion for 2007.

Kerkorian's interest in the company has touched off speculation on how he might try to influence the automaker.

The 90-year-old casino mogul rarely has acted passively as a major shareholder. He attempted to take over Chrysler during the 1990s and invested heavily in General Motors Corp. in 2006 in an attempt to foster an alignment with Nissan Motor Co. and Renault SA.

York, a former Chrysler chief financial officer, recently said Ford should sell its Mercury and Volvo brands, a move that quickly was dismissed by Ford officials. In addition to Land Rover and Jaguar, Ford sold its Aston Martin brand, but has said it plans to keep Volvo and work on making the unit more profitable.

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Associated Press Writer David Runk in Detroit contributed to this report.

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