Ford surprised by Kerkorian investment

Ford said it was "completely unaware" that billionaire investor Kirk Kerkorian was buying up shares of the company.

WASHINGTON (AP) -- Ford Motor Co. said Friday it first learned that billionaire Kirk Kerkorian was interested in investing in the automaker in early April but was "completely unaware" that he had begun buying shares until later in the month.

In a government filing, Ford outlined an April 4 meeting between Chief Executive Officer Alan Mulally, Chief Financial Officer Don Leclair and Jerry York, a top adviser to Kerkorian's Tracinda Corp.

Ford (F, Fortune 500) said in a statement that York "made what we thought was an off-the-cuff remark that Tracinda might be interested in investing in Ford."

Company officials said they did not know at the time that Tracinda had begun investing in Ford stock on April 2 and "we were completely unaware of Tracinda's investment until the weekend of April 26 and 27." Chairman Bill Ford "was as surprised as" Mulally and Leclair when he learned about the investment during that same weekend.

Kerkorian launched his previously announced $170 million cash offer to buy up to 20 million additional shares of Ford on Friday. With the 100 million Ford shares he acquired in April, it would give him about 5.5% of Ford.

Tracinda said the offer at $8.50 per share runs until June 9, unless it is extended.

Ford's board of directors recommended Friday that its stockholders to "take no action at this time" in response to the Tracinda tender offer.

Kerkorian's investment company said it was making the offer "because it believes Ford is an attractive investment. It does not have a present intent to acquire or influence control over the business of Ford."

Peter Henning, a former SEC attorney who teaches at Wayne State University Law School in Detroit, said the filing "inoculates them from any claim that they might have made any misleading statement" and helps them keep their distance from Kerkorian, making clear that they did not seek his investment.

Ford shares slipped 14 cents to $8.06 in afternoon trading. The $8.50 price is a 13.3% premium over Ford's closing price before Kerkorian announced the offer last month.

The filing with the U.S. Securities and Exchange Commission also notes that York had discussed Tracinda's interest in buying Jaguar and Land Rover from Ford and the investment company made an offer in July 2007.

Ford officials told York that Tracinda that it would not be included in a second round of bidders. The Jaguar and Land Rover brands were sold in March to India-based Tata Motors Ltd. for $2.3 billion, a third of the original purchase price.

During the company's annual meeting Thursday, Bill Ford praised Mulally's leadership of the company and said they "welcome Tracinda and thank them for their confidence in our plan."

Mulally and Ford leaders have been working to return Ford to profitability by 2009 and have been encouraged by the company's surprise $100 million profit during the first quarter of this year following losses of $2.7 billion for 2007.

Kerkorian's interest in the company has touched off speculation on how he might try to influence the automaker.

The 90-year-old casino mogul rarely has acted passively as a major shareholder. He attempted to take over Chrysler during the 1990s and invested heavily in General Motors Corp. (GM, Fortune 500) in 2006 in an attempt to foster an alignment with Nissan Motor Co. and Renault SA.

York, a former Chrysler chief financial officer, recently said Ford should sell its Mercury and Volvo brands, a move that quickly was dismissed by Ford officials. In addition to Land Rover and Jaguar, Ford sold its Aston Martin brand, but has said it plans to keep Volvo and work on making the unit more profitable.