Kerkorian Could Force Ford Family To Cede Voting Rights

John Horner
by John Horner
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kerkorian could force ford family to cede voting rights
According to the Wall Stree Journal, octogenarian investor Kirk Kerkorian's $8.50/share offer for up to 20 million shares of Ford stock is likely to be fully subscribed when it closes on Monday. Ya think? The Lion of Las Vegas' offer is well above Ford's closing price on Friday ($6.04). "The original tender included a clause reserving the right to pull the offer if Ford's stock price declined by 10 percent or more from its May 8 closing price of $8.20. But the Beverly Hills, Calif., company, which is wholly controlled by Mr. Kerkorian, declared it would not employ that escape route — in a sign of confidence in the future value of the company." Why is Kirkorian willing to pay over market price for a publicly traded stock? Hey. he's the billionaire and I'm not. Kerkorian and sidekick Jerry York have been publicly advocating the sale of Volvo and axing Mercury. One problem: Ford family members have long resisted putting Mercury down. In fact, Elena Ford ran Lincoln-Mercury for several years (and claimed credit for it's turnaround) before being "promoted" to head of marketing at Ford Motor Credit. The Journal raises interesting questions about how Kerkorian's ownership will affect the Ford heirs' iron grip on decision making. Said heirs own about three percent of Ford stock, yet control 40 percent of the voting rights. If and when FoMoCo needs more cash, Kerkorian seems prepared to provide it; but only if his shares get full voting rights. In that scenario, there's a good chance Crazy Henry's third generation lucky eggs will have to surrender control to Kirkorian to raise the cash. Either that or everybody loses everything in Chapter 11.
John Horner
John Horner

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  • Guyincognito Guyincognito on Jun 08, 2008

    The Ford family already gave up its control over the company. When they agreed to the mortgage up to the eyeballs secured loan, their ability to control the company was as good as gone. Now they just have to decide who they'd rather formally give control to, Captain Kirk or Citigroup, Goldman Sachs, and JP Morgan.

  • Martin Schwoerer Martin Schwoerer on Jun 08, 2008

    He's a nonagenarian, not an octogenarian -- born in 1917.

  • Relton Relton on Jun 09, 2008

    The Ford family's ability to control 40% of a publicly traded company with only 3% of the stock is being tried in court as we speak. If the family loses, well, there will be some changes. Bob

  • Craigefa Craigefa on Jun 09, 2008

    Please tell me there is something in this story that could force William Clay Ford to cede control of the Lions.