Billionaire investor Kirk Kerkorian has cancelled plans to buy more General Motors shares due to his displeasure at the firm ending alliance talks with Renault and Nissan, according to media reports.
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The BBC noted that Kerlorian, who already owns 9.9% of GM, had been known to be strongly in favour of the tie-up. It was also announced that Kerkorian’s representative at GM, Jerry York, had quit the car maker’s board.
GM reportedly said the decision to end talks with Renault and Nissan had the backing of all board members, including York.
The BBC said news of York’s resignation and Kerkorian’s decision not to buy any more stock saw GM’s shares lose 7% of their value on Friday.
Analysts reportedly speculated whether Kerkorian, widely seen as the catalyst behind GM’s accelerated turnaround efforts, will now choose to sell off some or all of the 56m shares he owns.
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By GlobalDataHis investment firm Tracinda said in a statement cited by the broadcaster’s website that it was cancelling plans to buy extra GM shares because it was unhappy that the carmaker had “abruptly announced the termination” of talks with Renault and Nissan.
Tracinda reportedly said GM should not have done so before the initial deadline and without obtaining an independent review from the board.
Former Chrysler executive York criticised GM in his resignation letter, the report said.
“I have grave reservations concerning the ability of the company’s current business model to successfully compete in the marketplace with those of the Asian producers,” York was quoted as saying in the letter.
He also attacked “an environment in the boardroom” that made it hard to challenge GM’s management, the BBC added.
GM spokesman Brian Akre told the Associated Press (AP) 11 of the 12 board members are independent of management.
“They all have very impressive backgrounds in business. To suggest that they have not challenged and questioned our management is absolutely absurd,” he said.
Some analysts told AP that York’s departure from the board gives Kerkorian more flexibility to pursue a number of options, which could include additional investments in the company or a proxy fight to wrestle control of the GM board.
GM said in a statement cited by AP that “under the direction of the GM board, we remain focused on our North America turnaround, where we are making real progress, progress that is well ahead of what some skeptics thought possible.”
“I suspect York is resigning at his instruction and it frees him from any charge that he has material nonpublic information,” John Coffee, a securities law expert at Columbia University, told the Associated Press.
Bank of America analyst Ronald Tadross said in a note to investors cited by AP that York’s departure “could drive other GM board member departures. If this becomes the case, we may hold some hope for positive fundamental change at GM.”
