Ford Motor Co. stockholders on Tuesday offered to sell half of the company to billionaire Kirk Kerkorian on growing concern Chief Executive Officer Alan Mulally will fail to restore profit as oil surges and the U.S. economy slows.
Investors tendered 1.02 billion shares, or almost half of Ford’s 2.2 billion shares outstanding, to Kerkorian, who will buy 20 million shares at $8.50 apiece.
Ford dropped 3.8 percent in New York trading.
“The market is saying $8.50 is one hell of a price for the next few years,” said Sean McAlinden, an economist with the Center for Automotive Research in Ann Arbor, Mich. “I don't think you are going to see $10 a share or $9 a share until deep into 2011.”
Record oil prices and a cooling economy are forcing customers to rein in purchases of gasoline-guzzling trucks, which account for more than half of Ford’s sales. Company stock lost 22 percent since the Dearborn, Mich.-based carmaker gave up its goal last month of making a profit in 2009.
Kerkorian, 91, is offering $170 million for the stock, for 34 percent more than yesterday’s closing price. The purchase will raise his stake in the automaker to 5.5 percent.
Ford declined 24 cents to $6.12 at 4 p.m. in New York Stock Exchange composite trading.
“It appears almost like it's an act of desperation,” Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Mich., said of the shares tendered to Kerkorian. The “mood is bleak” for “any stakeholder in Ford, from employees to shareholders.”
Last month, Ford, General Motors Corp. and Chrysler LLC were outsold for the first time in their home market by Asian automakers. The U.S. companies have relied more on pickup trucks and sport-utility vehicles for profits, and sales of those models shriveled as gasoline prices climbed toward $4 a gallon.
Ford’s F-Series pickup was unseated as the top-selling vehicle in the U.S. in May by two car models from Honda Motor Co. and two from Toyota Motor Corp. That was the first time a car outsold the F-Series during a month since Ford’s own Taurus did so in December 1992. The automaker is increasing production of cars and slashing output of trucks.
“The response from investors is understandable given that the offer represented a significant premium over Ford's current share price,” Ford said in an e-mailed statement on Tuesday. “The Ford team remains focused on executing our plan to transform Ford into a lean global enterprise delivering profitable growth for all.”
— Bloomberg News