Kerkorian to Take Bigger Stake in GM
RENEE MONTAGNE, host:
Coming up in business news, automakers.
California billionaire Kirk Kekorian is about to become one of General Motors' biggest stockholders. His investment company, Tracinda Corporation, announced yesterday that he plans to buy $870 million worth of GM stock. That purchase would give Kerkorian close to 9 percent of the automaker's stock. Jerome Vaughn of Detroit Public Radio reports.
JEROME VAUGHN reporting:
Tracinda Corporation issued a statement before the markets opened yesterday, announcing its intent to purchase 28 million shares of General Motors stock. The investment company said it would pay $31 per share, a premium of more than $11 per share compared to the stock's closing price on Tuesday. Tracinda's sole shareholder is Kirk Kerkorian. He's probably best known for being the largest investor in the Chrysler Corporation prior to its 1998 merger with Daimler-Benz. Auto analyst James Hall says Kerkorian has one thing in mind for his investments.
Mr. JAMES HALL (Auto Analyst): He bought into Chrysler because he saw an investment opportunity, a chance to make money.
VAUGHN: And Hall says that's what Kerkorian expects from General Motors. Before Tracinda's announcement, not many on Wall Street saw GM as a great investment. The world's largest automaker posted the first-quarter loss of more than a billion dollars last month. Sales fell more than 7 percent in April, but Comerica Bank chief economist Dana Johnson says Tracinda's decision may provide the spark needed to turn GM around.
Mr. DANA JOHNSON (Chief Economist, Comerica Bank): It sure looks to me like there's going to be a lot of change at the company, and hopefully, as the financial markets put pressure on the market, the change will be constructive and it'll emerge from this process more profitable.
VAUGHN: Yesterday, GM's stock price rose more than $5 in trading or about 18 percent.
For NPR News, I'm Jerome Vaughn in Detroit.