The Dealmaker Rides Again

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Crazy as all this sounds--we're talking GM here, the world's largest automaker--Kerkorian practically wrote the how-to book on such tactics. In the late '70s he loaded up on shares of Columbia Pictures, then turned into such a litigious nightmare that Columbia bought his stake for a 50% premium, a settlement that Fay Vincent, then CEO of Columbia, called "greenmail" (a characterization disputed by a Kerkorian spokesman). In the '90s Kerkorian was at the center of a gear-grinding saga with Chrysler. After buying a big stake and standing by for a few years, he launched a hostile takeover bid with Lee Iacocca in '95, finagled board representation and, most recently, wound up in a federal court in Delaware, arguing that he had been duped by management into supporting Chrysler's merger with DaimlerBenz (a case he lost last month; his lawyers are appealing).

Christensen promises that Kerkorian will be a gentlemanly, silent partner this time. "We made a courtesy call to GM senior management and had a friendly conversation," he says. "They said, 'welcome aboard.'" In a perverse way, Kerkorian may be the bogeyman GM needs, allowing CEO Rick Wagoner to play the good cop in negotiations with GM's union, with the specter of a Kerkorian-led breakup in the background. GM can now go to the United Auto Workers and say "you can deal with nice Rick Wagoner or Gordon Gekko," says auto analyst Stephen Cheetham of Bernstein Research.

Whatever Kerkorian's motives, associates say his intentions are clear. "Kirk tends to be a long-term investor, and don't let the fact that he's 87 fool you," says friend Mason, suggesting that Kerkorian will wait patiently for a GM turnaround. Says Ralph Whitworth, a financier who worked with Kerkorian in the '90s: "He's not a control freak. He just likes to get good returns."

No question, Kerkorian still gets a kick out of high-stakes deals. In 2000 his MGM Grand bought Steve Wynn's Mirage Resorts for $6.4 billion, and last June Kerkorian snapped up the Mandalay Resort Group for $4.8 billion, giving him control of 11 hotel-casinos on the Strip and more than half the gambling action. Last year Kerkorian sold his stake in the MGM movie studio for $5 billion to a consortium led by Sony. In fact, Kerkorian's dalliance with MGM over the years reads like a sordid back-lot love story. He first bought shares in the studio in 1969, sold MGM/UA to Ted Turner in '86, bought back most of it a few months later, unloaded it to an Italian financier in '90 and bought it again in '96. Whoever got stiffed along the way (and he's been criticized for gutting the studio), it wasn't Captain Kirk; he earned $500 million just buying MGM from Turner. "He's got ice water in his veins," says a rival. "For him, it's always about the deal, not the business."