Kerkorian's Ford Tender A Puzzling Move

Kirk Kerkorian’s Tracinda Corp. says that more than one billion shares of Ford’s common stock were offered as a result of the finacier’s tender of $8.50 a share. That’s about half of Ford’s outstanding common shares.

Tracinda will actually buy up just 20 million shares for about $170 million. It’s not surprising that Kerkorian got such a big response given that Ford shares are trading at just above $6.00 these days. Kerkorian’s offer will represent a nice premium over many investors’ cost of Ford shares.

But with most analysts pegging Ford’s share price in the next year to no more $8.00, and the Ford family controlling the voting shares, it remains to be seen what Tracinda gets out of this deal.

Kerkorian’s point man, Jerry York, has said the firm is just investing, and sees the restructuring work under CEO Alan Mulally paying off in the future.

But as I have said before, it’s hard to see where Tracinda, known for pushing companies to make overdue changes and asset sales, is going to wring anything out of Ford that it isn’t already doing. It has sold Aston Martin, Jaguar and Land Rover. There aren’t any buyers offering a fair price for Volvo.

Ford may well be worth $10.00 a share in 2010 if the economy cooperates even a little and Ford has a few product hits. But that’s two years off. It doesn’t seem like the kind of deal Tracinda and York pursue.

York tried to force a marriage on General Motors and Renault-Nissan, to no good end. Here is an idea. Perhaps York believes that Ford will be forced, with declining cash in a prolonged Recession, into an alliance with a foreign automaker, or that the Ford family will get behind a private equity acquisition. Under one of those scenarios, the purchase price on Ford would be a premium above what Tracinda is paying today.

But that scenario seems like a stretch given the scarcity of money in the debt markets today. And there are no signs that the family is ready to throw in the towel.

The mecurial York and Kerkorian are always up to something. What…we don’t know yet.