INVESTOR EYES BIGGER GM STAKE BILLIONAIRE KERKORIAN'S MANEUVER REVVING UP AUTOMAKER'S STOCK PRICE.

Byline: Gregory J. Wilcox Staff Writer

Billionaire corporate raider Kirk Kerkorian made an unsolicited $870 million bid Wednesday to nearly double his stake in General Motors Corp., sparking an 18 percent jump in the struggling company's stock and much speculation about his intent.

The offer made via the Beverly Hills resident's Tracinda Corp., of which he is the lone shareholder, is for 28 million shares at $31 each - a 13.4 percent premium on Tuesday's close.

Kerkorian's bid triggered investor interest and shares of the automaker closed Wednesday at $32.80, up $5.03. When the company reported a $1.1 billion first-quarter loss in April, its shares hit a 10-year low. In recent months GM sales have fallen, especially those of the big sport utility vehicle lines, as gasoline prices have risen.

Tracinda already owns 22 million shares of GM and the new purchase would put his stake at 8.8 percent, making Kerkorian, 87, the company's third-largest stakeholder. Forbes Magazine estimated Kerkorian's net worth at $8.9 billion last year.

His company is the majority owner of MGM Mirage Inc. and was the largest shareholder in Chrysler Corp. when the automaker merged with DaimlerBenz in 1998. Kerkorian did not like the way that marriage evolved and eventually sued when the company's stock price fell.

He lost that case last month but plans an appeal.

Kerkorian had no comment on the GM bid and the automaker was equally taciturn.

``GM typically does not express a view on specific investor activity. GM's board and management are committed to enhancing shareholder value for all of our investors,'' the statement said in part. The company did not return a call seeking elaboration.

Tracinda's release said the bid was being made public because rumors about it surfaced last weekend and that it was ``solely for investment purposes.''

A person familiar with the development said Kerkorian doesn't plan to make any demands of GM management and that this is simply a long-term investment: ``He has more money than most people, and maybe he sees things others don't.''

Skeptics abound, though.

``I don't believe he's going to stay as a passive investor; he's never done that despite the statements,'' said auto industry analyst David Healy, first vice president at Northbrook, Ill.-based Burnham Securities Inc. ``He was a major annoyance to Chrysler for many years yet never created any value.''

Healy also points out that Kerkorian has already profited from his overture. ``He's already made millions just by stirring up the pot and that could be just his game.''

There is also speculation that Kerkorian wants to wring more value out of GM's financial-services operations, especially since the company said in March that it might sell part of its General Motors Acceptance Corp.

Banc of America Securities LLC analyst Ronald A. Tadross wrote in a note that while Kerkorian's play will elevate the profile of GM's problems and maybe force a faster restructuring, Tracinda will likely leave that task to the automaker's management.

He also notes that things are much different now than when Kerkorian bought into Chrysler in 1990 for about $6 a share.

Also, the financial and auto sides are intertwined, so it would be tough to bust up the company. That might create value, but it would not be operationally palatable.

``It's like taking the engines off a jet plane. It could glide for a while and then it's going down. If you spin off the auto company it will be like that jet plane flying at 30,000 feet.''

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com

CAPTION(S):

2 photos, box

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(1 -- color) Kirk Kerkorian

Makes $870 million bid

(2) KIRK KERKORIAN

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KIRK KERKORIAN

SOURCES: Forbes, Associated Press 

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