GM: Kerkorian Move Raises Questions

Washington DC Septyember 29, 2006; The AIADA newsletter reported that the move by billionaire investor Kirk Kerkorian yesterday to make public his interest in buying up to 12 million additional shares in General Motors has sparked questions on what his motive behind the announcement may be.

Some people in the industry believe Kerkorian is just looking for a larger stake in the automaker and is not making the move to try and influence an alliance with Renault-Nissan. Dave Cole, president of the Center for Automotive Research, is quoted in today's Chicago Tribune as saying, "with or without Renault-Nissan, GM is ahead of the game in its restructuring, and Kerkorian sees that and thinks he can make money."

Argus Research analyst Kevin Tynan, however, believes Kerkorian's move is a way to "publicly nudge GM a little closer to an alliance," since Kerkorian's investment firm Tracinda Corp. promoted the alliance talks in the first place.

George Peterson, president of automotive research and consulting firm AutoPacific, sees both motives at work. "Purchasing more GM shares gives off vibrations he's more positive about GM and that the stock is still at a bargain value so he can pick up 12 million more shares and make a lot of money on it," he said. "It also puts him in a slightly stronger position to exert pressure on an alliance, which would result in a rapid short-term appreciation in the value of GM stock and bring him a huge return on his investment."