April 28 (Bloomberg) -- Investor Kirk Kerkorian said he bought 100 million Ford Motor Co. shares, or 4.7 percent, and intends to buy more in a vote of support for Chief Executive Officer Alan Mulally. Ford rose 10 percent in New York trading.

The 90-year-old billionaire paid about $691 million so far and plans to spend an additional $170 million. Kerkorian's Tracinda Corp. said the second-largest U.S. automaker is ``starting to achieve highly meaningful traction in its turnaround efforts.'' Mulally said Ford welcomes the investment.

The offer of $8.50 a share for another 20 million shares reflects confidence in Ford's progress after it narrowed losses by 50 percent in the fourth quarter of last year, Tracinda said. The initial investment was made April 2, three weeks before Dearborn, Michigan-based Ford reported a $100 million first- quarter profit that surprised analysts.

``This shows a lot of faith in the revival of the company,'' Dan Poole, senior vice president of equity research at National City Corp., in Cleveland, said in an interview. Because the Ford family controls 40 percent of the voting shares, ``I would have to believe this is a passive stake.''

Three years ago, Tracinda described its first purchase of General Motors Corp. shares as ``strictly passive'' and voiced support for management. Kerkorian later built his stake as high as 9.9 percent as he stepped up pressure on CEO Rick Wagoner to take bold action to transform the world's largest automaker. Tracinda didn't characterize its intentions with Ford.

Motives?

``It's hard to know what Kerkorian's motives are,'' said Maryann Keller, an independent auto analyst based in Greenwich, Connecticut. ``Is he making a passive investment? His style is to buy and stir the pot.''

Tracinda bought Ford shares ``purely for investment purposes,'' Jerry York, a Kerkorian adviser, told Bloomberg Television. ``No one knows for sure, but we think there is very serious money to be made here.''

Ford gained 71 cents to $8.21 at 4:15 p.m. in New York Stock Exchange composite trading.

``We welcome confidence in Ford and the progress we are making on our transformational plan,'' Mulally and Chairman William Clay Ford Jr. said in an e-mailed statement.

Tracinda bought the initial 100 million shares at an average price of about $6.91 per share, making him Ford's fourth-biggest shareholder, according to Bloomberg data. At $8.50 a share for the additional 20 million shares, the investment company would pay a 13.3 percent premium over the $7.50 April 25 closing price.

Getting Better

Ford posted its first-quarter profit last week ``despite the difficult U.S. economic environment,'' Tracinda said in the statement. Ford ``will continue to show significant improvements in its results going forward.''

In 1995, Kerkorian made an unsuccessful takeover bid for Chrysler Corp. In May 2005 he disclosed his initial stake in GM and became the biggest individual shareholder.

Kerkorian pressured GM to put York on the automaker's board. Kerkorian then urged Wagoner to seek an alliance with Carlos Ghosn's Renault SA and Nissan Motor Co. Kerkorian later sold his stock after GM directors backed Wagoner's decision to remain independent.

Tracinda hasn't asked for a board seat, Ford spokesman Mark Truby said in an e-mail.

No Comparison

``I don't think this is a GM situation,'' said analyst Keller. ``Everything Mulally has done, he's done correctly.''

Tracinda spokesman Tom Johnson said the company had no comment beyond the statement. York, in the Bloomberg Television interview, said Mulally ``is a tremendous leader, a great manager.''

Ford can survive as an independent company and has enough ``cash to get it done,'' York said, referring to Mulally's plans to restore profitability by 2009. The company secured $23.4 billion in financing in late 2006 to develop new cars and trucks while closing plants and cutting jobs.

Kerkorian may have netted about $106 million on his GM investment, including six dividend payments while he held the shares, according to information available on his purchases from U.S. regulatory filings.

Biggest Gain

Ford shares had their biggest gain since 2002 on April 24, rising 12 percent after Ford defied analysts' forecasts for a loss in recording the $100 million profit.

They fell 11 percent a day later, to $7.50, after analysts at three securities firms said investors may cool on a stock that had been rising since mid-March.

The Ford family holds 40 percent voting power through its 71 million Class B shares.

The family has two members on the automaker's board: Bill Ford and his cousin Edsel Ford II, both great-grandsons of founder Henry Ford. Bill Ford was chief executive officer from 2001 until September 2006, when he recruited Mulally, 62, from Boeing Co. to succeed him.

William Clay Ford, 83 and the father of Bill Ford, owned 10.3 million, or 15 percent, of Class B shares as of Feb. 1, according to Ford's proxy statement, filed on April 4. William Ford retired as a company director in 2005.

William Ford, Bill Ford and Edsel Ford are trustees of a trust that holds 52 million Class B shares, the proxy said. Trustees must vote as directed by a plurality of the shares in the trust.

Mulally's Plan

Mulally, Ford's top executive since September 2006, has overseen the elimination of 46,300 jobs at Ford's North American operations the past two years. The company has closed, or is scheduled to close, nine plants. One shut plant is scheduled to be re-opened as Mulally matches Ford's manufacturing capacity to its reduced share of the U.S. auto market.

About 4,200 additional U.S. factory workers agreed to take buyouts during this year's first quarter. Ford offered 10 different buyout or early retirement options, running as much as $140,000 to entice employees to leave.

The company is introducing new models in the second half of this year, including the seven-passenger Flex wagon and Lincoln MKS sedan. Ford also is developing a new version of its Taurus sedan.

Ford's 7.45 percent note due July 2031 today gained 2.75 cents to 75.75 cents on the dollar, yielding 10.19 percent, according to Trace, the NASD's bond-price reporting system of the Financial Industry Regulatory Agency.

Digging Out

Kerkorian is investing in Ford as it continues to dig out of a record $12.6 billion loss in 2006 and seeks to return to profitability in 2009. Ford said last week that it still expects to report a loss this year.

Ford relied on sales of large pickup trucks and sport- utility vehicles for the bulk of its profits in the 1990s. Since 2005, sales of those vehicles have slid because of rising fuel prices and competition from so-called crossover wagons.

Ford's first-quarter profit came as earnings in Europe and other regions offset losses in the company's North American unit, the primary reason for deficits the past two years. The automaker recorded $1.2 billion in cost reductions in North America during the quarter.

Ford faces challenges to sustaining the first-quarter results. Jim Farley, Ford's worldwide sales chief, said on an April 1 conference call that the current quarter may be the worst for U.S. auto sales this year.

The company last week projected industrywide U.S. auto sales this year of as few as 15 million. It had previously forecast 15.7 million. Ford also deepened a planned second-quarter production cut to 710,000 cars and trucks, 12 percent fewer than 2007's second quarter.

Four Months Early

Ford got a boost today when it reached a tentative labor agreement with the Canadian Auto Workers union on a new three- year contract. The company's current labor contract with the Toronto-based union doesn't expire until mid-September.

The union agreed to freeze wages and give up a week of vacation in return for keeping a St. Thomas, Ontario, plant open until 2011.

Credit-default swaps on Ford's debt fell 1 basis point to 873 basis points, according to CMA Datavision in New York. The contracts are designed to protect bondholders against default. A decrease in the price indicates an improvement in the perception of a company's credit quality.

To contact the reporter of this story: Bill Koenig in Southfield, Michigan at wkoenig@bloomberg.net;

Last Updated: April 28, 2008 18:27 EDT