Billionaire investor Kirk Kerkorian dies at 98

David Shepardson
Detroit News Washington Bureau

Washington — Billionaire investor Kirk Kerkorian, the casino mogul whose investment in all three Detroit automakers prodded them to change — and who twice sought to take over Chrysler — died in Beverly Hills, California, late Monday. He was 98.

Kerkorian was a major player in the U.S. auto industry for more than a decade. His moves ultimately prompted the sale of Chrysler twice. He unsuccessfully pushed for a tie-up between General Motors and Renault-Nissan.

The activist investor warned GM it had to change its ways to survive — something the automaker embraced only after it won massive government bailouts. And Kerkorian helped prod Chrysler to recognize it couldn’t make it on its own.

“He was an extremely wealthy individual who didn’t control the auto industry, but definitely influenced it with his money,” said Karl Brauer, senior analyst at Kelley Blue Book. “He was quick to acknowledge the problems the manufacturers were suffering and wanted to do something to keep the companies from going out of business.”

Kerkorian and his holding company, Tracinda, were the largest shareholders in the Auburn Hills automaker in the 1990s, when he regularly urged Chrysler management to offer bigger dividends and stock buybacks. In 1995, he launched a hostile takeover bid for Chrysler. While Chrysler executives fought off the takeover, the event prompted then-CEO Robert Eaton to open merger discussions with Daimler-Benz AG.

“Chrysler wasn’t going to be competitive long-term,” Brauer said. “He forced the whole industry to take a look at that.”

Kerkorian supported the merger of Daimler-Benz and Chrysler in 1998, but later sued DaimlerChrysler over how the combined company was managed.

In April 2007, he offered $4.5 billion for the Chrysler Group, a bid rejected by Daimler AG in favor of one by Cerberus Capital Management LP. He pledged to give Chrysler’s unions and management an ownership stake in the business.

Kerkorian hoped for similar moves at General Motors Corp. in 2006 when he bought 9.9 percent of the company’s stock and tried forcing an alliance with Renault-Nissan. Tracinda sold its stake in GM after the company’s board voted to end discussions regarding the proposed alliance. Kerkorian aide Jerry York pushed GM to move faster to change its business model; he resigned 10 months after joining GM’s board.

In a Detroit News interview in December 2008, York called GM’s near-collapse ahead of a government bailout “really sad.” “It’s been so obvious to so many GM watchers for so long that many of these actions were needed and it’s come down to this: $4 billion by year’s end or lights out,” he said.

Kerkorian made one more auto industry investment, buying a 6.5 percent stake in Ford Motor Co. in early 2008. He sold by the end of that year, losing hundreds of millions of dollars. But he earned $2.7 billion in profits on his Chrysler investments and about $100 million on his GM stake.

Kerkorian was the largest shareholder in MGM Resorts International, the casino conglomerate he founded in the early 1990s. Its holdings include the MGM Grand casino in Detroit, which was the company’s third most profitable casino in 2014, with operating income of $119 million. He also bought and sold movie studio Metro-Goldwyn-Mayer twice, before finally selling it to Sony.

Forbes said he was worth $4.2 billion at the time of his death.

Sen. Minority Leader Harry Reid, D-Nev., said in a speech on the Senate floor Tuesday that Kerkorian knew a lot about business.

“He didn't make all of his money in movies, in hotel and casinos. He branched out. He made a number of fortunes,” Reid said. “When people said, ‘How does he know anything about the automobile industry?’ he wound up owning large chunks of General Motors. He was one of the chief players in Chrysler, where he no longer made in those propositions millions of dollars, but billions.”

Autotrader senior analyst Michelle Krebs said, “Kirk Kerkorian’s two attempts to take over Chrysler and another for General Motors demonstrated the auto industry is no different than other industries in that they are vulnerable to activist investors, a trend continuing today.”

Pilot in World War II

Born in Fresno, California, Kerkor “Kirk” Kerkorian was the son of Armenian immigrants. He dropped out of school in eighth grade, boxed under the name “Rifle Right Kerkorian” and was a pilot in World War II. After buying an 84-acre plot of land in Las Vegas in 1962, he opened the original MGM Grand in 1969.

He purchased the Flamingo Hotel in Las Vegas in 1967 and eventually sold the company to Hilton Hotels Corporation.

Kerkorian built the world’s largest hotel three times during his career: The International in 1967, the MGM Grand Hotel in 1973, and the MGM Grand Hotel and Theme Park in 1993. CityCenter Las Vegas, a mixed-use hotel, casino and entertainment project developed MGM Resorts International, opened in 2009 as the largest privately funded construction project ever in the United States.

Kerkorian also owned and operated Trans International Airlines and Western Airlines.

The Las Vegas Sun reported last year he had married his long-time girlfriend Una Davis.

He founded the Lincy Foundation in 1989 to provide aid to Armenia following a devastating earthquake in 1988, and donated hundreds of millions of dollars to relief and construction efforts, his company said.

Jim Murren, chairman and CEO of MGM Resorts International, said in a statement: “MGM Resorts and our family of 62,000 employees are honoring the memory of a great man, a great business leader, a great community leader, an innovator and one of our country’s greatest generation. Mr. Kerkorian combined brilliant business insight with steadfast integrity to become one of the most reputable and influential financiers of our time.”