The Dealmaker Rides Again

PROFILE

Without being in Kirk Kerkorian's mind, it's hard to say why a secretive 87-year-old Beverly Hills billionaire would suddenly buy shares in an industrial dinosaur like General Motors. So let's say this: The man doesn't like sitting in the backseat, not in his personal life, certainly not as a businessman. Most mornings he drives himself to work in a Jeep Grand Cherokee, arriving at the office by 10:30. He can afford a chauffeur, of course, since he's worth an estimated $9 billion, a fortune built over a half-century of buying and selling assets from airlines to real estate, casinos, hotels, movie studios and automakers. Yet while many octogenarians may aspire to improve their golf score, Kerkorian keeps thinking big and shows no signs of slowing down, not when it comes to driving, investing or his favorite sport, tennis, which he plays most weekends, still packing a powerful forehand. "He's a real competitor" on the court, says George Mason, a longtime business colleague and tennis pal.

Kerkorian took another big swing last week. His investment vehicle, Tracinda, named for daughters Tracy and Linda, announced it had bought 22 million shares of General Motors and planned to buy up to 28 million more, for nearly a 9% stake, which would make Kerkorian one of GM's largest and most potentially nettlesome stockholders. Why GM, and why now? Just a couple of months ago, when a friend broached the idea, the billionaire brushed it off. "He said, 'They have a lot of problems,'" recalls Mason. GM stock has been a dud, and despite popping 18% after Tracinda announced its stake, the company received a major blow last week when Standard & Poor's downgraded GM's credit rating to junk (along with Ford's). "Kirk thinks it's a strong company, with strong cash flow and strong assets," says his lawyer Terry Christensen. "He thinks the management can solve GM's problems."

That Kerkorian doesn't even drive a GM car suggests he may not be in love with the goods. Loaded down with excess factory capacity, waning SUV sales and crushing health-care liabilities, the company is no quick turnaround play. So you have to wonder, What is he thinking? Kerkorian isn't talking--he has been virtually silent with the press since 1971. But there was no shortage of speculation on Wall Street and in Detroit. The scuttlebutt: that Kerkorian will try to force GM to spin off its lucrative financing unit, GMAC; that he will try to line up a murderers' row of billionaires and private equity firms for a hostile takeover; that he will make such a pest of himself that GM will buy him out for a premium, just so he'll buzz off.