Ford confirms Mulally met with Tracinda’s York

Kerkorian offer vaults Ford stock by 9%

Kirk Kerkorian
UPDATED: 4/28/08 4:17 pm EDT DETROIT -- Kirk Kerkorianís investment in Ford Motor Co. comes just a few weeks after his representative met with Ford CEO Alan Mulally.

Jerry York, a former auto executive who represents Kerkorianís Tracinda Corp., met with Mulally and Ford CFO Don Leclair in Dearborn in early April, a Ford official confirmed Monday. Kerkorian, the 90-year-old billionaire investor, did not attend.

ďThe meeting was scheduled after Jerry Yorkís long-standing request to meet with Alan Mulally,Ē Ford spokesman Mark Truby said. ďFord executives routinely meet with industry executives and industry thought leaders to share perspective and gather feedback.Ē

Truby declined to say whether the possibility of a Tracinda investment was discussed during the meeting. He said Ford Motor learned of Kerkorianís investment ďover the weekend.Ē

Tracinda announced today that it plans to make a cash tender offer for up to 20 million shares of Ford stock at $8.50 per share. Tracinda already owns 100 million shares, representing 4.7 percent of Ford Motorís shares outstanding. Kerkorianís company began buying Ford shares April 2 and has paid an average price of $6.91 per share, Tracinda said. York didn't meet with Mulally until after the purchases began.

Today's news boosted Ford shares 9 percent on the New York Stock Exchange. Ford stock on Monday closed at $8.21 a share, up 71 cents a share on trading volume more than double the daily average.

Ford released a statement this morning from Chairman Bill Ford and Mulally:

ďWe welcome confidence in Ford and the progress we are making on our transformation plan. Any investor can purchase Ford shares, which are sold on the open market. The Ford team remains focused on executing our plan to transform Ford into a lean global enterprise delivering profitable growth for all.Ē

Tracinda said it has been following Ford closely and has found that the automakerís management is achieving ďhighly meaningful traction in its turnaround efforts.Ē

Tracinda said Ford's improvement was reinforced by first-quarter results announced last week.

Ford beat Wall Street estimates by posting a $100 million net profit for the first three months of 2008. The improvement came despite a tough U.S. economy and was connected to much higher profits in Europe, a much narrower loss in North America and continued cost-cutting.

Kerkorian, known most for his holdings in casino giant MGM Mirage, now has pursued investments in all three Detroit automakers over the past several years. He tried to buy Chrysler and invested in General Motors, eventually placing York on GMís board and pushing for an alliance with Nissan-Renault.

Tracinda has not asked about putting a representative on the Ford Motor board, Truby said. He decline to comment on whether Ford would be willing to add such a board seat.

Because it is still controlled by the Ford family, Ford Motor is considered to have more ability to withstand pressure from Tracinda or other outside investors. The Ford family controls 40 percent of the shareholder vote through its special Class B stock with super voting power. The family owns 70,852,076 Class B shares.

Morgan Stanley analyst Jonathan Steinmetz said Tracinda is likely to modify its pattern of activist behavior because of the Ford family control.

"Something will have to give," Steinmetz said in a research note. "In this case, we believe Tracinda is unlikely to be activist in the conventional sense, given the voting structure."

Instead, Tracinda is likely to be a "constructive agitator" and ultimately could push for a seat on Ford's board of directors, the analyst said. York would be the likely candidate to hold any board seat allocated to Tracinda.

PRESS RELEASE: Tracinda Announces Tender Offer for 20,000,000 Shares of Common Stock of Ford Motor Co.

LOS ANGELES--(BUSINESS WIRE)--Tracinda Corporation today announced that it intends to make a cash tender offer for up to 20,000,000 shares of common stock of Ford Motor Company (NYSE: F) at a price of $8.50 per share. The offer price represents a 13.3% premium over Fordís closing stock price of $7.50 on April 25, 2008 and a 38.7% premium over Fordís closing stock price on April 2, 2008, the day upon which Tracinda began accumulating shares in the company.

The shares to be purchased pursuant to the offer represent approximately 1% of the outstanding shares of Ford Motor Company common stock. Tracinda Corporation, of which Kirk Kerkorian is the sole shareholder, currently owns 100,000,000 shares of Ford common stock, which represents approximately 4.7% of the outstanding shares. Tracindaís average cost for such shares is approximately $6.91 per share. Upon completion of the offer, Tracinda would beneficially own 120,000,000 shares of Ford common stock, or approximately 5.6% of the outstanding shares.

Tracinda has been following Ford closely since the company released its fourth quarter 2007 results which indicated that Fordís management was starting to achieve highly meaningful traction in its turnaround efforts. Last week this was reinforced by Fordís first quarter 2008 results, achieved despite the difficult U.S. economic environment. Tracinda believes that Ford management under the leadership of Chief Executive Officer Alan Mulally will continue to show significant improvements in its results going forward.

Once the tender offer is commenced, offering materials will be mailed to Ford stockholders and filed with the Securities and Exchange Commission. Ford stockholders are urged to read the offering materials when they become available because they will contain important information.

The tender offer will be subject to customary conditions for transactions of this type, including expiration of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Tracindaís offer will not be subject to financing.

You can reach Amy Wilson at awilson@crain.com

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