Kerkorian Could Force Ford Family To Cede Voting Rights
June 8th, 2008 9:58 PM Share
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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.
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Published June 8th, 2008 9:46 AM