Kirk Kerkorian's investment firm said Tuesday it sold 7.3 million of its shares in Ford Motor Co. and plans to further cut what is now a 6.1 percent stake, for a potential loss of more than half a billion dollars on the investment.
Tracinda Corp. sold the shares at an average price of $2.43 per share and said it may sell its remaining 133.5 million shares depending on market conditions.
Kerkorian has tried to leave his mark on U.S. automakers over the past decade. But Tracinda said that in light of current economic conditions it now sees “unique value” in other industries such as gambling, hotels and oil and gas, so it's moving its resources.
The sale comes just four months after Tracinda purchased 20 million of the Dearborn, Mich.-based automaker's shares at market rates to boost his stake to 6.49 percent. A week earlier, Kerkorian had acquired another 20 million shares through a tender offer for about $170 million, or $8.50 per share. Based on that share price, Kerkorian lost about $44.3 million in Tuesday's sale.
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At the time the tender offer was announced, Tracinda said it owned 100 million Ford shares at average cost of $6.91 per share. If the firm sold those shares at Monday's closing price of $2.33 apiece, it would translate to a loss of about $458million.
Ford shares fell 11 cents, or 4.7 percent, to $2.22 in Tuesday morning trading.
In announcing the June tender offer, Tracinda said it believed that Ford was starting to make progress on its restructuring plan, adding that it expected the automaker to post continued improvements.
But high gas prices, a slumping overall economy, low consumer confidence and the tightening of credit markets have taken their toll on the automaker and the industry overall in the months since.
Kerkorian has a mixed track record with the other U.S. automakers. He made an unsuccessful $4.5 billion cash offer for Chrysler last year and pushed for General Motors Corp. to form an alliance with Nissan Motor Co. and Renault SA in 2006 after acquiring nearly 10 percent of GM.
Kerkorian sold his stake in the Detroit-based automaker after the proposed alliance was scrapped following three months of negotiations.
Tracinda also was Chrysler's largest shareholder at the time of its 1998 combination with Daimler-Benz. Kerkorian sued the combined company in 2000, saying Daimler engineered a takeover of Chrysler, then cheated him out of billions by casting the deal as a merger of equals. A federal judge rejected his claim.
Ford spokesman Mark Truby said the company did not know about Kerkorian's plans until after Tracinda's regulatory filing with the Securities and Exchange Commission.