General Motors’ dissident shareholder Kirk Kerkorian has told GM he is interested in buying up to 12m more shares of the company as he presses the car maker to enter a three-way alliance with Renault and Nissan – GM shares soared to a 52-week high on the news, according to the Associated Press (AP).
On Thursday, GM stock surged as high as $US33.64 in early trading on the New York Stock Exchange, above its previous 52-week high of $33.50; later it eased back to $32.87, up 59 cents, or 1.8%, the report noted.
Kerkorian’s Tracinda already owns 56m shares, or 9.9% of GM’s common stock. If it goes over 10%, it would require a number of regulatory approvals, including from the federal Office of Thrift Supervision, because GM owns banking and insurance interests, AP said.
The news agency noted that the move came a day after GM chairman and chief executive Rick Wagoner met with Carlos Ghosn, who heads Renault and Nissan Motor. The two met in Paris and agreed to continue talking about the alliance even though the discussions are running into difficulties. The talks are taking place at the behest of Kerkorian and Jerome York, Tracinda’s representative on the GM board, AP added.
Tracinda reportedly said in a Securities and Exchange Commission filing on Thursday that it still supports the alliance between GM, Renault and Nissan: “Tracinda continues to believe that a strong opportunity exists in a potential alliance between General Motors, Renault and Nissan and that there should be strong General Motors Board involvement in the analysis of such a potential alliance, including the utilisation of independent advisors,” Tracinda’s filing said.
Gerald Meyers, a former chairman of American Motors, who now teaches leadership at the University of Michigan, told the Associated Press that Kerkorian and his associates likely sense that the GM-Nissan-Renault negotiations are not progressing well and the move was meant to reinvigorate the talks.
“I think he’s playing defence,” Meyers was quoted as saying. “These faltering negotiations are not good for the stock, and he’s trying to prop it up.”
AP said GM currently has about 565.6m outstanding shares and a Tracinda purchase of 12m more shares would bring Kerkorian’s stake to 12% of the company.
“We are seeking the cooperation and support of the company and its management in connection with these filings and any related proceedings, as we believe additional investment by Tracinda in GM would be viewed positively by investors, and your support will maximize the likelihood of obtaining regulatory approval,” Tracinda’s filing said, according to AP.
In the filing, which included a letter to Wagoner, Tracinda reportedly told GM it is interested in buying 6m shares of common stock on the open market and may consider buying an additional 6m shares.
The Associated Press said Wagoner did not comment on the filing on Thursday during a discussion with reporters at the Paris motor show other than to say the company had been made aware of the filing on Wednesday night.
Renault and GM representatives would not say whether Wednesday’s meeting between Wagoner and Ghosn addressed differences over how much each side’s shareholders would stand to benefit from an alliance the report added.
According to a report in The Wall Street Journal, cited in the AP report, Wagoner is pressing Ghosn for a multibillion dollar payment to GM as part of any alliance deal, insisting that his shareholders would otherwise be short-changed.
GM spokesman Brian Akre told the news agency that GM believed that “the benefit from the synergies that have been discussed are disproportionate.”
He reportedly added: “GM would be looking at ways to alleviate that concern. Speaking hypothetically, that could include a payment, that could include a number of different options.”