Ex-Chrysler Exec Named to Tracinda Post : Detroit: The move by Kirk Kerkorian is spurring speculation that he may launch a new buyout bid for the No. 3 auto maker.
DETROIT — Billionaire investor Kirk Kerkorian on Tuesday hired Chrysler Corp.’s former chief financial officer as vice chairman of Tracinda Corp., a move likely to add credibility to his takeover designs on the auto maker.
Jerome York, chief financial officer of International Business Machines Corp., joins Tracinda as the Las Vegas-based gaming and entertainment company has been increasing its stake in Chrysler.
Steven Silbert, an attorney for Tracinda and a close associate of Kerkorian, said the company may seek to have York appointed to Chrysler’s board of directors.
“Obviously, we feel steps can be taken to enhance shareholder value that aren’t being taken,†Silbert said.
Chrysler, the nation’s No. 3 auto maker, declined comment.
Investors reacted positively to York’s appointment on the apparent belief it could presage a new buyout bid for the auto maker. Chrysler shares Tuesday hit a 1995 high of $57.125, up $2.50, in heavy trading on the New York Stock Exchange.
“York doesn’t see himself as being Kerkorian’s chief croupier for the rest of his life,†said David Healy, an analyst for Burnham Investment Research. “He wouldn’t have joined Tracinda unless he thought he had a good chance of becoming CEO of Chrysler.â€
Kerkorian, the auto maker’s largest shareholder, made an unsuccessful $22.8-billion bid for Chrysler in April. The hostile, $55-a-share offer was rejected and Kerkorian retreated when he was unable to obtain financing.
York, who worked for Chrysler for 14 years and previously served on its board of directors, left the auto maker in 1993 after he was passed over as the successor to Chairman Lee Iacocca.
Kerkorian, 77, holds 14.1% of Chrysler’s shares but is unhappy with the stock’s lackluster performance. With Iacocca’s backing, Kerkorian has pressed Chrysler management to take steps to increase the stock’s price.
York, 57, has both an intimate knowledge of Chrysler and close relationships with its major lenders, which could help Kerkorian raise funds if he decided to mount a new takeover effort, analysts said.
Tracinda officials remain coy about their intentions toward Chrysler. “We won’t speculate on our future plans,†Silbert said.
Tracinda, owner of the MGM Grand Hotel & Casino, said that York will be involved in all of its investments. He becomes a director of MGM Grand Inc. and was given a potentially lucrative employment contract tied to Chrysler’s stock price. “This is a unique entrepreneurial opportunity for me,†York said in a statement.
Kerkorian said in a statement that York brings a broad range of management capabilities to Tracinda, including an “in-depth knowledge of the automobile industry and a history of creating shareholder value.â€
York, a West Point graduate, has a master’s degree in engineering from the Massachusetts Institute of Technology and an MBA from the University of Michigan. He held management positions with RCA Corp., Ford Motor Co. and General Motors Corp. before joining Chrysler in 1979.
At Chrysler, York held a number of financial and operating management positions. He served as controller, vice president of Dodge division and director of Mexico operations. York, an Iacocca favorite, had a reputation as a workaholic and relentless cost-cutter.
In 1993, he was lured away from Chrysler by IBM Chairman Louis Gerstner. While at IBM, York was praised for reining in costs and he was named to IBM’s board of directors in November.
