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Billionaire sells Ford shares

2008-12-31 08:00

Billionaire investor Kirk Kerkorian has sold his remaining 5% stake in Ford Motor Co., according to his investment company, Tracinda
Corp.

Kerkorian, 91, has unloaded his last 107 million shares - a 4.89% stake - ending his investment with the troubled Dearborn, Michigan, automaker whose turnaround efforts he expressed confidence in earlier this year.

Kerkorian's stake in Ford peaked in June, when he owned 6.49% after paying $1 billion at an average share price of $7.10. He began scaling back his ownership in October, selling shares at an average price of $2.43 each, according to regulatory filings. That marked a loss of about two-thirds of his investment, or roughly $650 million.

Ford spokesman Mark Truby declined to comment on Kerkorian's withdrawal and said the company "remains completely focused on executing our transformation plan."

Kerkorian first said in April he would raise his existing stake in Ford to 5.6%, offering a 13.3% premium over the share's existing price. The offer came just days after the automaker posted a surprise $100 million first-quarter profit.

Kerkorian continued increasing his stake in June and met with Ford Chief Executive Alan Mulally and Executive Chairman Bill Ford to discuss the company's turnaround plan.

Further deterioration

But the situation for the auto industry has rapidly deteriorated since then. Last month, Ford posted a loss of $129 million in the third quarter. Among Detroit's automakers, the company is considered the best positioned to weather the industry slump and has said it does not need federal loans to survive.

Nonetheless, its sales have slumped and its stock has withered. Shares of Ford have fallen 66% so far this year.

"I just look at it as a negative indicator for the auto industry as a whole," said Stephen Spivey, auto analyst for the consulting firm Frost & Sullivan. "The smart money is pulling out of this industry and you've got the taxpayer being the only significant investor left in these companies."

Kerkorian's Ford venture was the latest effort by the investor to build a significant investment in a US-based automotive company.

A year ago, Tracinda made an unsuccessful $4.5 billion cash offer for Chrysler. It dumped the last block of what once was a nearly 10% share of General Motors Corp in 2006.

Kerkorian won a seat on GM's board for Jerome York, one of his advisers, and he pushed for an alliance between GM, Nissan Motor Co.
and Renault SA. GM's board voted to explore the possibility, but after three months of discussion, the idea was scrapped.

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