Kirk Kerkorian

Kerkorian a big fan of the rhythm method

Kirk Kerkorian has abruptly withdrawn his bid for the MGM Bellagio and City Center properties right before he could finish the deal. Kerkorian told MGM’s board yesterday that his investment vehicle Tracinda was pulling its offer. Some shareholders raised an eyebrow over Kerkorian’s bid for two properties that he ostensibly owns by being the largest shareholder of MGM and having virtual control of the board. The move was seen as a way to cherry-pick luxury assets into one fancy, higher growth pool and leave MGM with its “core properties.”
MGM shares (and Kerkorian’s coffers) have jumped 38% since the bid was announced two months ago but retracted almost 10% in reaction to this morning’s withdrawal. MGM also announced a 50-50 venture with Caribbean casino developer Kerzner to build a new casino on the strip.
Kerkorian Pulls Bids for MGM Casinos [DealBook]

KK Turns 90

Happy Birthday, Kirk Kerkorian! You’ve done so much in your lifetime. Granted this is not necessarily such a difficult task, considering you’re now officially a nonagenarian. But it’s commendable nonetheless.
Let’s take a quick trip through your accomplishments, starting with your education: dropping out of school in 8th grade. Winning the Pacific amateur welterweight championship under the name “Rifle Right Kerkorian.” Tracinda. Las Vegas. Daimler-Chrysler (almost). A striking resemblance to Ian McKellan. A flawlessly-applied Mystic Tan. All back-patting feats.
Kirk, we hate to spoil the non-surprise but no one from your office returned calls attempting to inquire as to whether or not anything special was being planned for the big day. We’re pretty sure this means the girl who answers your phone is being sent out to get an ice-cream cake now. Everyone will be ushered into the conference room within the hour. Bob from accounting won’t take part in the singing of ‘Happy Birthday,’ but don’t take that personally, he never does.
Kirk, we’ve had a note about this day on the white board for weeks. That’s how much we care.

Kerkorian personally directing the Ocean’s 14 swindle

kerkorian4.JPG Kirk “Rifle Right” Kerkorian, CEO of Tracinda Corp, wants to throw one more jab at Steve Wynn and the Las Vegas luxury market before becoming a nonagenarian. Tracinda released a statement yesterday that says the company intends to make a bid for MGM’s Bellagio and CityCenter properties.
Kerkorian is going to turn ninety on June 6. He was born the day after “Army registration day,” or the day conscription for World War I began in the US. After failing to meet Army registration requirements in the maternity ward as a one-day old, Kerkorian went on to drop out of school in the 8th grade, become an amateur boxer, then a fighter pilot, then (just like that) the father of the megaresort with a net worth of $15bn.
Kerkorian has been vying with Steve Wynn for dominance of the Las Vegas luxury market for decades, in a battle that previously culminated in MGM’s purchase of Wynn’s Mirage property. Oh, that’s right, Kerkorian owns 56% of MGM, and virtually controls the company through his majority stake. Essentially he’s making a bid for his own assets, and causing the stock of the public company to skyrocket in price. The Tracinda filing sent MGM shares (NYSE: MGM) from almost $63 to almost $80 this morning. This means that in the last 12 hours, Kerkorian’s personal MGM stock has increased over $2.5bn in value. Kerkorian gets to, in one analyst’s words, “cherry-pick the best assets and growth from the public company” and reshuffle an asset pool, concentrating luxury properties in the private company. Some view this as problematic, from the Wall Street Journal:

Mr. Kerkorian controls the company through his majority stake. He is close to both the company’s board and its management. Those relationships could raise questions about how minority shareholders might fare in any deal that rejiggers the company’s assets. Analysts speculated that Mr. Kerkorian might want to pay cash or swap his MGM Mirage stock for the Bellagio and CityCenter.

Kerkorian Pushes MGM Shake-Up With Offer for Two Prized Assets [Wall Street Journal]

  • 14 May 2007 at 10:34 AM
  • Chrysler

Daimler’s $650 Million Bar Tab

DaimlerChrysler_Verwaltungsbau_Moehringen.jpgThere’s a lot of talk today about the sale of Chrysler to Cerberus (and Lindsay Campbell’s appearance on the Sopranos, and how Warren Buffett hates animals). Larry Ribstein sees the transaction as a paradigm of the private equity deal (the hound of Hades is putting up $7.4 b “in return for which it is demanding cooperation,” so that it can “clean up contracting problems that are threatening to send an otherwise viable business down the tubes). Rupert Murdoch’s Wall Street Journal notes that Cerberus could effectively cut costs by consolidating Chrysler Financial and GMAC (of which it has a 51% stake). The Journal also adds that Stephen Feinberg, the head of the three-headed dog, is not only a Princeton grad, not only a champion tennis player, not only a paratrooper, but an avid deer hunter (which is important, because men who like to kill animals tend to know what they’re doing, and deer are vastly overpopulated in New Jersey). Finally, the J answers the question that’s been weighing on everyone’s mind, “Did Cerberus have a website last year?” A. No.
The Times quotes Hans-Richard Schmitz, representative of the German Association for the Protection of Shareholders, who weighed in with some not at all breaking news and the go-to metaphor for the deal: “This marriage made in heaven turned out to be a complete failure.” The Gray Lady also has some charts.
Rupert’s other publication, the Post goes where no one else dares go, and reminds everyone that “Sun-drenched billionaire Kirk Kerkorian was shut out of the process despite a late $4.5 billion bid for Chrysler.” (Our emphasis).
But it’s Deal Journal that actually tells us something interesting: by “sale of $7.4 billion,” Daimler actually means “it’s going to cost us $650 million” to get rid its red-headed step-child.

As the release itself explains:
Cerberus is contributing $5 billion into the new company (this does not go to Daimler). And another $1.05 billion goes into the financial business (this, again, does not go to Daimler.) Daimler gets $1.35 billion (but will loan the new company $400 million.)
So Daimler makes about $1 billion then, right? Actually, no.
Like a politician obliquely saying “mistakes were made,” Daimler goes on to say that the restructuring “will give rise to a cash outflow” of $1.6 billion.
In sum, the net outflow will be about $650 million, plus another $878 million of “prepayment compensation”, Daimler says. And that’s how a $7.4 billion windfall actually turns into a bill.

We also like this little exercise in decoding deal-speak because it affirms what Carney said a few months ago about how the only way anyone would take on Chrysler is if they were being paid to do so: “When we called one of our banker friends to ask for a valuation on what GM might pay for Chrysler, he joked that GM might ask Daimler to pay them to take it off their hands.”
A $7.4 Billion Windfall for Daimler. Not! [Deal Journal]
Chrysler going to the dog [Ideoblog]
Buyout Firm Close to Winning Chrysler Bidding [WSJ]
Chrysler Group to Be Sold for $7.4 Billion [NYT]

Kirk Kerkorian Bids For Chrysler!

kirkkerorianbidsforchrysler.JPGThis is getting exciting! Kirk Kerkorian’s investment company, Tracinda, made a $4.5 billion cash bid for the Chrysler Group today, according to reports. This comes fast on the heals of three other headline making Chrysler stories:
• that Daimler-Chrysler’s big German boss, CEO Dieter Zetsche, confirmed the Chrylser group was for sale,
• that bids had been submitted by Blackstone, Cerebrus and Canadaian automanufacturer Magna International,
• and that JP Morgan was putting the deal on a fast track, reviewing the bids beginning this week and hoped to have selected a winner by month’s end.
Well, you can wipe those off the whiteboards, kids, because the headline is going to Kerkorian’s bid. Not only is it a cash deal, he’s also got the backing of both the United Auto Workers and Chrysler senior management.
Prior to this announcement it was widely rumored that Magna might have the strongest bid, since it was thought to be the most likely bidder to keep the Chrysler relatively intact and gain the cooperation of unions. But Kerkorian’s offer now seems the front-runner. In fact, it seems so strong that it might entirely change the game.
“You can bet the boys down at Blackstone and Cerebus are cancelling their Easter weekend plans,” a source who consults for many private equity groups told DealBreaker. “Time to rewrite the bids.”
Kerkorian has a long, storied history with Chrysler. In the mid-nineties he attempted to takeover the company in an alliance with Lee Iacocca. He remained one of the largest single shareholders in the car company until it merger with Daimler-Benz in 1998. At the time—and to this day—many saw Kerkorian’s handiwork behind the deal.
In the nineties Kerkorian was often represented as a “corporate raider” and many feared he wanted to own Chrysler only to destroy it, or at least disassemble the company and slice of its less profitable divisions and product lines. These days many fear that the private equity bidders have similar plans, and Kerkorian seems to be promising to keep the company intact.
“Can KirkKerk actually be the white knight he always claims he is and save Chrysler from the ‘merger of equals’ he initially drove them to? Stay tuned for the next episode of Crazy Chrysler!” Jalopnik editor Ray Wert told DealBreaker. (Note: Ray uses phrases like “he initially drove them to” but this isn’t his fault. It is a well-known condition that car pundits cannot resist automotive puns.)
“It’s like the late 90’s all over again, only in reverse,” Ray added. (Note: Reverse. See what we mean?)
Kerkorian Offers $4.5 Billion for Chrysler [New York Times]
Tracinda’s Letters to Chrysler [pdf via New York Times]
The Official Car Pundit Drinking Game: Is The UAW In Bed With Kirk Kerkorian? [Jalopnik]
Chrysler sale looks certain [Detroit News]
Update: The lads at Deal Journal are outdoing themselves translating the letters from Tracinda speak into a normal human language.
A sample:

The returns will not come quickly. Investors that feel the need to show “mark to market” results in their funds in relatively short time frames (just a few years) will not be willing to invest as necessary over an unusually lengthy period of time to achieve the necessary end results.
Dr. Z., why are you imperiling the future of Chrysler by playing footsie with the fast-money crowd from New York? I don’t have to live by the same rules and can be a better steward than the folks, like Cerberus, who’ve chosen the hound of Hell as their name and mascot.

Translating Kerkorian’s Chrysler Letter [Deal Journal]
Translating Kerkorian’s Letter II: The Terms [Deal Journal]

  • 01 Dec 2006 at 8:55 AM
  • GM

Kirk Kekorian Out of GM: Rumors Pretty Much Confirmed!

kirkkerkorian.jpgThe rumors circulating yesterday about Kirk Kekorian selling the remains of his stake in General Motors have now more or less been confirmed. Yesterday afternoon, when large blocks of the shares started hitting the market, people started to guess that Captain Kirk was beaming himself of off Planet General Motors. His attempts to install new leadership had been thwarted earlier, his red-shirted lieutenant had left the company’s board and Kerkorian seemed focused on other areas.
Now the Wall Street Journal quotes a “person close to the matter”–probably someone who works for Kerkorian talking off the record–confirming the sale.

Billionaire Kirk Kerkorian abruptly unloaded his entire stake in General Motors Corp., walking away with a modest profit but essentially conceding defeat in his aggressive 20-month effort to reshape the world’s largest auto maker.
A person close to the matter said Mr. Kerkorian, only recently GM’s largest individual investor with a 9.9% stake, had sold his last 28 million shares yesterday, nearly two months after his closest aide had quit GM’s board. The exit removed for now a threat to GM Chairman and Chief Executive Officer Rick Wagoner, who had come under pressure from Mr. Kerkorian’s top representative for moving too slowly to fix deep-seated problems such as high employee costs, declining car sales and overlapping brands.

Of course, the stock of GM has been pounded down recently and probably will continue to drop. DealBreaker’s rumor-mongering, paranoid friend–who we’ll stress has about as much access to Kerkorian’s inner thoughts as George Bush has to a path to victory in Iraq–wonders if all this isn’t a plot by Kerkorian to buy his way back in on a lower cost basis and after GM CEO Rick Wagoner has been humiliated by bottomed out stock prices.
Activist Kerkorian Moves To Unload Entire GM Stake [Wall Street Journal]

  • 30 Nov 2006 at 3:38 PM
  • GM

There’s No Intelligent Life At GM, Scotty. Beam Me Up!

kirkkerkorian.jpg13D Tracker has the (maybe, probably) scoop:

Reports circulating that Kirk Kerkorian has sold his remaining 4.95% interest in General Motors (NYSE: GM). A large block of shares traded recently which is believed to be from Kerkorian. However, owning less than 5%, he doesn’t have to file any public information on his trading activity in the stock.
In an earlier 13D filing, Kerkorian disclosed they agreed to sell 14,000,000 shares which brought his stake to 28 million shares. It just so happens that a 28 million share block trade crossed the tape at 2:41PM at $29.25 per share.

Reports Circulating Kirk Kerkorian Sold his Remaining 4.95% Interest in General Motors

  • 05 Jul 2006 at 12:55 PM
  • GM

Will The French Kiss General Motors?

kirkkerkorian.jpgHow much do you love Kirk Kerkorian, who owns nearly 10% of General Motors and recently proposed that the trouble car company enter into an alliance with Nissan and Renault? Pure evil genius. So what if GM faces declining profits, plummeting sales and a declining market for gas-guzzling SUVs in the age of Really Effin’ Expensive gasoline? Renault is 15% owned by the French government, otherwise known as the folks who own the exact same percentage of Airbus parent EADS. Of course they’ll go for it.
The French are like Life Cereal’s Mikey, but with cheese breath. They’ll eat anything.

Renault’s Ghosn May Take On Too Much With GM Tie-Up