Billionaire investor Kirk Kerkorian may have decided that casinos are a better bet than cars. The dissident General Motors Corp. shareholder said Wednesday that he will slash his stake in the troubled automaker by selling 14 million shares for about $462 million.
The sale, announced in a regulatory filing, came on the same day that Kerkorian's Tracinda Corp. announced plans to offer about $825 million for up to 15 million shares of MGM Mirage Inc. The transaction, at $55 per share, would boost Kerkorian's stake in the ownership of the Bellagio in Las Vegas and other casinos to more than 60 percent.
In the GM filing with the Securities and Exchange Commission, Tracinda said it had agreed on Monday to sell the shares at $33 each in a private transaction. The agreement will close on Friday, the filing said.
Kerkorian now owns 56 million shares, or 9.9 percent of GM, according to the LionShares.com financial Web site. The sale would reduce his stake to 42 million, or 7.4 percent of the company's 565.5 million outstanding shares.
Tracinda ！ which is solely owned by Kerkorian ！ already holds 158.4 million shares of MGM Mirage, or 56.3 percent of the company's outstanding stock.
GM shares closed down $1.52, or 4.7 percent, at $31.09 on the New York Stock Exchange Wednesday. The drop cost Kerkorian about $63 million on his remaining investment in GM.
Burnham Securities analyst David Healy said the MGM and GM actions may be related, but Kerkorian likely has the resources to buy the MGM stake without selling GM stock.
"He's giving them the Chinese water drop torture instead of bailing out all at once," Healy said of the GM sale. "He's still trying to stir the pot."
MGM Mirage shares rose $5.21, or 10.6 percent, to close at $54.21 on the New York Stock Exchange.
Tracinda spokeswoman Carrie Bloom said she could not comment on the GM transaction beyond the SEC filing.
"GM's practice is not to speculate on the motivations of its shareholders," said company spokeswoman Renee Rashid-Merem.
Last month, Jerome York, a key adviser to Kerkorian, resigned from the GM board, citing a board room environment unreceptive to extensive probing and "grave reservations" about GM's abilities against Asian competitors.
The move came after GM decided against joining an alliance with Renault SA of France and Nissan Motor Corp. of Japan. The three companies began talks on the alliance at the behest of Tracinda.
Healy, who owns GM stock, said investors should stop following Kerkorian and pay more attention to gains made by GM in its turnaround plan.
The struggling GM lost just over $3 billion during the first nine months of the year, and its U.S. sales are down 9.4 percent. It has cut production and drastically reduced costs by winning health care concessions from the UAW and convincing about 35,000 hourly workers to leave under early retirement or buyout plans.
On top of all that, Toyota Motor Corp. may soon steal GM's crown as the world's largest automaker.
Kevin Reale, an automotive analyst at AMR research, said Kerkorian's move doesn't rule out the possibility that he would start a proxy fight for control of GM.
"I don't think anything is out of the question right now for Mr. Kerkorian for how he's going to work with General Motors," he said. "I don't think we've heard the last of Kerkorian in automotive."
