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Kerkorian won't purchase more GM stock; ally Jerome York resigns from board

Kerkorian won't purchase more GM stock; ally Jerome York resigns from board

Dissident General Motors Corp. shareholder Kirk Kerkorian said Friday that he no longer plans to acquire additional stock in the world's biggest automaker, citing GM's decision not to pursue an alliance with Renault and Nissan.
Kerkorian's adviser Jerome York also resigned from the GM board.
In his resignation letter, which was obtained by The Associated Press, York criticized the board room environment at GM as "not very receptive to probing much beyond the materials provided by management" and said he had "grave reservations" about GM's ability to compete with Asian rivals.
Kerkorian, the billionaire investor who owns a 9.9 percent stake in the company, has been pushing for more changes at GM. The company has said its own restructuring program, which includes job and plant cuts, is starting to show results.
GM shares tumbled on the news, shaving nearly $1.2 billion (euro0.95 billion) off the company's value and about $116 million (euro91.6 million) off Kerkorian's stake. GM shares dropped $2.08, or 6.3 percent, to close at $31.05 on the New York Stock Exchange.
Kerkorian, who promoted the idea of GM joining Renault SA and Nissan Motor Co. in a broad alliance, had told the Securities and Exchange Commission last week that he was considering increasing his stake in GM to as much as 12 percent.
In a filing to the SEC on Friday, Kerkorian's Tracinda Corp. said it no longer planned to acquire those shares. But it said it would continue to review its investment in GM and may dispose of or acquire more shares in the future.
GM confirmed York's resignation and issued a statement defending its restructuring progress. Tracinda spokeswoman Carrie Bloom declined to comment.
GM, Nissan and Renault announced on Wednesday that they were ending their alliance talks. GM Chief Executive Rick Wagoner said the company believed it would benefit from the proposed linkup far less than Nissan and Renault, which already are joined in an existing alliance. GM wanted the other companies to compensate it for that imbalance, but Renault-Nissan said that demand contradicted the spirit of an alliance.
Wagoner said GM's board voted unanimously on Tuesday to end the talks, meaning York also voted against the alliance. But Tracinda said it was disappointed by GM's decision.
GM on Friday again stressed that the board's decision was unanimous.
"This decision was made after a comprehensive process that included joint synergy evaluation by the management of all three companies and receipt of advice on the proposal by two prominent financial advisers," the company said.
But York maintained that the board should have sought its own evaluation.
"The right thing to have done here _ from a governance perspective if not a legal perspective _ would have been for the board to have hired its own independent advisors, who in turn, could have designed the study process to more fully get at particularly the potential procurement savings," he wrote in the letter to George Fisher, the board's lead director.
GM also said its turnaround efforts had yielded "progress that is well ahead of what some skeptics thought possible."
"Through its support and actions, the GM board has indicated the best way to drive value is to continue to remain focused and vigilant in our stated turnaround program," it said.


Updated : 2020-12-04 07:50 GMT+08:00