Kerkorian’s play for Chrysler was an uphill drive when it began five months ago, and it still is. After bungling his first bid in April, Kerkorian is now expected to sidestep the bankers and board members and take his case directly to Chrysler’s shareholders for a vote, a tactic of corporate warfare known as a consent solicitation. The difference between this move and his last attempt: he won’t need to raise money to finance a bid, because votes-not money-will win the day. “I can’t recall” a case where the strategy has worked completely, admits a Kerkorian aide.
The fight will be decided by the big institutions that own Chrysler’s shares, and right now they don’t seem to be itching for a change. The math is simple: Kerkorian needs 50.1 percent of the votes to win the battle. His company, Tracinda Corp., holds just under 15 percent of Chrysler’s shares. A spokeswoman for Fidelity Investments, which holds more than 13 percent, insists that the fund company views Chrysler as a long-term holding, not a takeover play, and hasn’t held talks with Kerkorian’s group about a possible vote. The third largest shareholder is Vanguard’s Windsor Fund, which held more than 5 percent of Chrysler shares last spring. Manager John Neff says he’s happy with Eaton & Company in charge. “New management is not needed,” he says.
While York’s hiring may not be enough to turn the tide, he could help escalate the dispute into a messy, expensive battle. A legendarily hard worker-he once pulled so many all-nighters at Chrysler that he was rolled out of a meeting on a stretcher-York is respected on Wall Street and is well acquainted with the folks at Fidelity, which also holds a huge stake of the stock of his most recent employer, IBM. York’s payoff for his upcoming work at Tracinda: $25 million in cash, plus a profit-sharing already worth $19 million on paper.
But the bigger prize, observers say, is the chance to run Chrysler if Team Kerkorian pulls from behind to win the race. Not everyone is convinced York is ready for the top job. “He lacks that ultimate dimension of being a leader,” says Robert S. Miller, former Chrysler vice chairman and York’s old boss. Adds a top headhunter: “If I were doing a search for [a CEO for] Chrysler, he would not be on my list.” “My track record speaks for itself,” responds York. “When I became CFO of Chrysler, its stock was in the teens . . . When I left, it was in the low 40s and rising.” If Kerkorian should unseat Eaton, York may have some able assistance at the helm. A source tells NEWSWEEK that Ia-coca has also talked with two former top Chrysler executives, Harold Sperlich and Gerald Greenwald, about signing on. Greenwald wouldn’t comment; Sperlich couldn’t be reached.
While the world awaits its next move, the Kerkorian camp is keeping mum about its strategy. “We’re evaluating our plans,” says Stephen D. Silbert, Kerkorian’s longtime adviser. Says another aide: “Nothing is off the table.” Chrysler is taking the threat seriously: last week the board agreed to pay out $1 billion in excess cash to shareholders via a stock buyback, a move meant to appease Kerkorian. Chrysler wouldn’t comment on the takeover speculation, but its stock hit a 52-week high on the news, and is now up nearly 50 percent since Kerkorian launched his bid.
Chrysler’s board is also pushing Iacocca to sever his ties with the takeover tycoon in exchange for letting him cash in $45 million in stock options. “The directors] have finally awakened to the very real possibility of a takeover, and frankly, they’re scared to death,” says a source who does business with Chrysler. Sources say the board may even offer Kerkorian seats on the board to get him to back off. There’s still another act left in this drama, so it’s too early to predict the finale. In Steve Martin’s version of “Cyrano,” the ugly guy wins the girl. But in this case, no matter how attractive a team does Kerkorian’s wooing for him, everyone knows he’s still the one lurking in the bushes.
