Kerkorian Cuts his GM Stake

24 November 2006

DETROIT: Activist shareholder Kirk Kerkorian has signalled his intent to sell around a quarter of his near 9.9% stake in General Motors.

The Nevada-based octogenarian billionaire dropped plans to increase his shares in the company last month when it abandoned alliance talks with Renault and Nissan [WARC News: 5-Oct-06].

The rebuff also prompted the resignation of Jerry York, Kerkorian's financial adviser, from the ailing automaker's board. York said at the time he had "grave reservations" about GM's ability to compete with Asian carmakers.

Despite his decision to sell a substantial slice of his holding, Kerkorian will remain the automaker's third-largest investor.

The company lost $10.6 billion (€8.17bn; £5.53bn) last year and is in the painful throes of a cost-cutting program to revitalize its North American operations after losing market share to foreign brands for most of the last decade.

The turnaround calls for GM to close fourteen plants and slash its manufacturing payrolls in the US and Canada by around 35,000 jobs in the next few years. Chairman/ceo Rick Wagoner says this will save the company $9bn a year.

Kerkorian's decision to reduce his interest in the firm sent its shares sliding by $1.52 (4.66%) to close at $31.09.

Data sourced from BBC Online; additional content by WARC staff