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DETROIT - Billionaire Kirk Kerkorian's Tracinda Corp investment firm says it has sold $US462 million ($698 million) of stock in General Motors this week, cutting its stake to 7.4 per cent from 9.9 per cent.
Yesterday's news sent GM stock plummeting. Shares lost more than 5 per cent in mid-afternoon trade on the New York Stock Exchange - the largest one-day fall in percentage terms since October 6, when the automaker said it would not seek an alliance with Renault-Nissan.
Since Friday, GM's shares have dropped about 10 per cent. The stock's 5 per cent decline yesterday was the biggest drag on the Dow Jones industrial average.
News of Kerkorian's GM sale came on the same day he announced a tender offer for $US825 million of stock in MGM Mirage Inc that would raise his stake to almost 62 per cent of the hotel and casino operator.
Kerkorian's dual moves touched off speculation the billionaire investor, who has a history of trading corporate assets in Las Vegas, Hollywood and Detroit, could be steering away from a protracted fight for control of GM's board.
"It signals that he pretty much is going to go quietly into the night," said Kevin Reale, an automotive analyst at AMR Research.
In a US regulatory filing, Tracinda said it had agreed on Monday to sell 14 million GM common shares in a private transaction for $US33 a share.
A Tracinda spokeswoman said the investment company had no further comment. GM said it would not speculate on what Kerkorian's sale implied.
"GM's practice is not to comment on the actions of its shareholders," said GM spokeswoman Renee Rashid-Merem.
Kerkorian's associate Jerry York resigned from GM's board on October 6 in a dispute over board oversight and strategy triggered by GM's decision not to pursue the alliance with Renault-Nissan he had attempted to broker on Kerkorian's behalf.
York's resignation from GM's board - and his public criticism of the oversight it provided - led many analysts to believe that Kerkorian could be gearing up for a proxy fight to seek control of the board and oust chief executive Rick Wagoner.
But this week's stock sale cast doubt on the view that Kerkorian was readying for a fight with GM.
"Maybe he doesn't think there will be a blip in Rick Wagoner's plan - showing he can't create the controversy he needs to change the board's direction," Reale said.
Other analysts said Kerkorian had retained a sizable enough stake in GM to wield influence and could still buy back the shares he had sold.
"The tea leaves are a little harder to read on this one," said Pat McGurn, special counsel at proxy advisory service ISS. "If [Kerkorian] had sold off his entire position that would have put an end to it once and for all."
Global Insight automotive analyst George Magliano agreed Kerkorian's actions would keep investors guessing about his intentions.
"I wouldn't want to be the one who says he's done with GM and he's going to back off, because his history is that he doesn't back off," he said.
Kerkorian first began amassing what became a $US1.7-billion stake in GM in April 2005. He paid an average of just over $US30 for the shares he acquired.
Tracinda sold shares once in that period. In December, Kerkorian sold 12 million shares for $US252 million to show a loss for tax purposes and then bought back the same number in January for $US263 million.
Kerkorian had been the catalyst behind the proposed tie-up between France's Renault SA and Japan's Nissan Motor Co, which he and York had seen as a way to accelerate GM's turnaround efforts.
Both Renault and Nissan are headed by Carlos Ghosn, and analysts had seen Kerkorian's proposed deal as a way to bring in an executive highly regarded for his success at Nissan.
But GM's board, including York, voted unanimously to break off talks with Renault-Nissan in early October.
Kerkorian, 89, responded by withdrawing plans to buy 12 million more shares in GM, something he had said he might do when the potential alliance was still on the table.
GM shares were down 4.6 per cent, or $US1.50, to $US31.12, on the New York Stock Exchange.
Despite this week's sharp sell-off, GM shares were still up 60 per cent since the start of the year.
- REUTERS
