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Kerkorian up stake in Ford to 6.49 percent

/ Source: The Associated Press

Billionaire investor Kirk Kerkorian has raised his stake in Ford Motor Co. to 6.49 percent, saying his investment company will consider throwing additional money into the struggling automaker's turnaround effort.

Kerkorian's Tracinda Corp. announced Thursday in a regulatory filing that it had purchased another 20 million Ford shares, increasing its stake to 140.8 million. It previously had disclosed a 5.5 percent stake.

The filing with the U.S. Securities and Exchange Commission came two days after Ford Chief Executive Alan Mulally and Executive Chairman Bill Ford met with officials from Tracinda including Kerkorian to discuss the Dearborn-based automaker's transformation plan.

Kerkorian's company has expressed confidence in Mulally and Ford's management team and completed a tender offer last week to buy 20 million Ford shares for about $170 million, or $8.50 per share. Kerkorian purchased additional shares at the market rate after the tender offer was completed, according to the SEC filing.

The increased stake likely is based on economics because Kerkorian already has the ear of top Ford executives, said Mark Warnsman, an analyst with Calyon Securities.

"I don't think he needed to do anything further to get management's attention," Warnsman said. "Does this signal a change in Tracinda's strategy? I doubt it. I look at it as just straight economics."

When Tracinda owned 9.9 percent of General Motors Corp. back in February of 2006, Kerkorian adviser and former Chrysler chief financial officer Jerome York was elected to the GM board.

Warnsman said it's too soon to tell whether Kerkorian will seek a Ford board seat.

"It'll be interesting to watch," he said.

Ford President of the Americas Mark Fields told The Associated Press in an interview Thursday that the increased stake "is an indication of confidence that we have the right (turnaround) plan and the right management team."

Fields said he isn't sure what Kerkorian's motives are and doesn't worry about them.

"I personally don't spend a lot of time on that. We're just focused on the kind of things that we can control," Fields said.

Ford shares rose 2 cents to $6.24 in afternoon trading.

In the filing, Tracinda reiterated its previous statements that it may propose business strategies for Ford and has explored a possible capital infusion to give Ford more flexibility in implementing its turnaround effort.

Tracinda and Kerkorian "have explored, and may continue to explore, the possible infusion of additional capital," the filing stated.

Kerkorian, 91, has tried to leave his mark on Detroit's auto companies during the past decade, and his accumulation of Ford shares has been closely watched. According to the financial Web site, the latest purchases would make Tracinda Ford's fifth-largest shareholder.

Even with Kerkorian's larger stake, Ford has protections from a takeover. The Ford family's shares carry 40 percent voting rights through a special class of stock, providing the company with stability from outside intrusion.

Ford's stock price has declined in recent weeks as consumers grapple with record-high gasoline prices and a sluggish economy, dampening automobile sales. Ford said earlier this month that it no longer expects to return to profitability by 2009 and is cutting North American production for the rest of the year.