DETROIT -- Las Vegas casino mogul Kirk Kerkorian has fallen short in his bid to more than double his stake in General Motors after failing to pry loose enough shares from other investors in the ailing automaker.
Kerkorian, who shook up the former Chrysler Corp. with a hostile takeover bid a decade ago, had offered to spend up to $868 million to buy as many as 28 million GM shares at $31 a piece under a tender launched last month.
But the number of shares tendered fell far short of that goal, according to a statement on Wednesday from Kerkorian's investment firm, Tracinda Corp.
Citing a preliminary count by Mellon Investor Services, Tracinda said only about 18.9 million shares had been offered up.
Tracinda, the majority owner of casino and hotel operator MGM Mirage Inc., already owns 22 million GM shares, or about 3.9 percent of the company. It said it would now own 40,926,557 shares, or 7.2 percent.
Under the tender offer, which expired on Tuesday, Kerkorian had sought to control nearly 9 percent of the world's largest automaker. A GM spokesman said a 7.2 percent stake was still expected to make Kerkorian the company's biggest individual investor, however.
Ironically, Kerkorian's tender offer was hampered by its own initial success. GM's shares soared more than 18 percent to $32.80 on the New York Stock Exchange, when Tracinda announced the offer on May 4, and analysts said it buoyed investor confidence in a tarnished icon of American industry.
"We view the tender offer being undersubscribed as a useful gauge of sentiment towards GM shares," JPMorgan analyst Himanshu Patel said. It indicates, he said, that "most holders who wanted to sell out at or below $31 did so, in turn suggesting the stock has downside support at current levels."
If the offer had been oversubscribed it might have been seen as a negative for GM, and a vote of no confidence in its ability to return its core automotive operations to profitability.
But analyst David Healy of Burnham Securities said market forces simply worked against Kerkorian, whose tender offer price was widely seen as having set a floor for GM shares.
"It was undersubscribed because during most of the time that the tender offer was in effect the market price of the stock was higher than the tender offer," Healy told Reuters. "If you wanted to sell your GM stock you'd receive more if you sold it on the open market than if you tendered it to Kerkorian."
Kerkorian's offer followed GM's first-quarter loss of $1.1 billion, its worst result since it narrowly escaped bankruptcy in 1992, and management's efforts to seek relief from its largest union to help cut massive health-care costs.
It also came a day before GM and cross-town rival Ford Motor Co. saw their credit ratings cut to "junk" status for the first time ever.
A lawyer for Kerkorian has said the billionaire corporate raider would be a passive investor in GM. But analysts say his history suggests otherwise and that he may seek to pressure GM's management to speed up a restructuring of the company.
Kerkorian's offer expired on the same day that GM Chairman and CEO Rick Wagoner, addressing shareholders at a contentious annual meeting, said GM expects to close more U.S. assembly and component plants over the next few years and slash at least 25,000 manufacturing jobs, as it battles high costs and shrinking market share.
Wagoner said GM expects to save $2.5 billion a year from the cost-cutting measures.
JPMorgan's Patel said Tracinda may raise its tender offer price for GM shares, since it was "undersubscribed by a relatively large degree."
Tracinda declined to comment or to say whether the octogenarian Kerkorian had been disappointed by the outcome of his bid.