Bloomberg

Investor Kirk Kerkorian said he bought 100 million Ford Motor Co. shares, or 4.7 percent, and intends to buy more in a vote of support for Chief Executive Officer Alan Mulally.

Ford rose as much as 11 percent in New York trading. Kerkorian's Tracinda Corp. said the second-largest U.S. automaker is ``starting to achieve highly meaningful traction in its turnaround efforts.'' Kerkorian paid about $691 million so far and plans to spend an additional $170 million.

The move reflects confidence in Ford's progress after it narrowed losses by 50 percent in the fourth quarter of last year, Tracinda said. The initial investment was made April 2, three weeks before Dearborn, Michigan-based Ford reported a $100 million first-quarter profit that surprised analysts.

``This shows a lot of faith in the revival of the company,'' Dan Poole, senior vice president of equity research at National City Corp., in Cleveland, said in an interview. Because the Ford family controls 40 percent of the voting shares, ``I would have to believe this is a passive stake.''

Three year ago, Tracinda described its first investment in General Motors Corp. as ``strictly passive'' and voiced support for its management. Kerkorian later built his stake as high as 9.9 percent as he stepped up pressure on CEO Rick Wagoner to take bold action to transform the world's largest automaker. Tracinda didn't characterize its intentions with Ford.

Ford gained 67 cents, or 8.9 percent, to $8.17 at 10:53 a.m. in New York Stock Exchange composite trading after reaching $8.29 earlier.

`Welcome'

``We welcome confidence in Ford and the progress we are making on our transformation plan,'' Mulally and Chairman William Clay Ford Jr. said in an e-mailed statement.

Tracinda bought the initial 100 million shares at an average price of about $6.91 per share, making him Ford's fourth-biggest shareholder, according to Bloomberg data. The investment company intends to bid for the additional 20 million at $8.50, a 13.3 percent premium over the $7.50 closing price on April 25.

Ford posted its first-quarter profit last week ``despite the difficult U.S. economic environment,'' Tracinda said in the statement. Ford ``will continue to show significant improvements in its results going forward.''

In 1995, Kerkorian, 90, made an unsuccessful takeover bid for Chrysler Corp. In May 2005 he disclosed his initial stake in GM and became the biggest individual shareholder.

Kerkorian pressured GM to put his adviser Jerry York on the automaker's board. Kerkorian then urged Wagoner to seek an alliance with Carlos Ghosn's Renault SA and Nissan Motor Co. York quit the board and Kerkorian later sold his GM stock when Wagoner decided to remain independent.

Not a ``GM Situation'

``I don't think this is a GM situation,'' said Maryann Keller, an independent auto analyst based in Greenwich, Connecticut. ``Everything Mulally has done, he's done correctly.''

Tracinda spokesman Tom Johnson said the company had no comment beyond the statement.

The shares had their biggest gain since 2002 on April 24, rising 12 percent after Ford defied analysts' forecasts for a loss in recording the $100 million profit.

They fell 11 percent a day later, to $7.50, after analysts at three securities firms said investors may cool on a stock that had been rising since mid-March.

The Ford family holds 40 percent voting power through its 71 million Class B shares.

On Board

The family has two members on the automaker's board: Bill Ford and his cousin Edsel Ford II, both great-grandsons of founder Henry Ford. Bill Ford was chief executive officer from 2001 until September 2006, when he recruited Mulally, 62, from Boeing Co. to succeed him.

William Clay Ford, 83 and the father of Bill Ford, owned 10.3 million, or 15 percent, of Class B shares as of Feb. 1, according to Ford's proxy statement, filed on April 4. William Ford retired as a company director in 2005.

William Ford, Bill Ford and Edsel Ford are trustees of a trust that holds 52 million Class B shares, the proxy said. Trustees must vote as directed by a plurality of the shares in the trust, the filing said.

``It's hard to know what Kerkorian's motives are,'' said analyst Keller. ``Is he making a passive investment? His style is to buy and stir the pot.''

Bonds

Ford's 7.45 percent note due July 2031 today gained 1.94 cents to 74.94 cents on the dollar, yielding 10.31 percent, according to Trace, the NASD's bond-price reporting system of the Financial Industry Regulatory Agency.

Kerkorian is investing in Ford as it continues to dig out of a record $12.6 billion loss in 2006 and seeks to return to profitability in 2009. Ford said last week that it still expects to report a loss this year.

Ford relied on sales of large pickup trucks and sport- utility vehicles for the bulk of its profits in the 1990s. Since 2005, sales of those vehicles have slid because of rising fuel prices and competition from so-called crossover wagons.

Ford's first-quarter profit came as earnings in Europe and other regions offset losses in the company's North American unit, the primary reason for deficits the past two years. The automaker recorded $1.2 billion in cost reductions in North America during the quarter.

Ford faces challenges to sustaining the first-quarter results. Jim Farley, Ford's worldwide sales chief, said on an April 1 conference call that the current quarter may be the worst for U.S. auto sales this year.

The company last week projected industrywide U.S. auto sales this year of as few as 15 million. It had previously forecast 15.7 million. Ford also deepened a planned second-quarter production cut to 710,000 cars and trucks, 12 percent fewer than 2007's second quarter.

Family Matters

The Ford family has grappled with whether to retain its position at Ford Motor. Ghosn, the CEO of Renault and Nissan, in 2006 proposed an equity alliance with Renault and Nissan if the Fords abandoned the Class B shares, people familiar with the matter said that year. The Fords declined the offer.

In 2007, family members discussed whether to sell part of their controlling stake, people with direct knowledge of the talks said. No sale occurred.

For three straight years, Ford shareholders have considered a proposal to eliminate the Class B shares, which was opposed by the automaker. The proposal drew a 27.4 percent yes vote in 2007, the highest tally so far, and is on the ballot again at the company's May 8 shareholder meeting in Wilmington, Delaware.

York said in a March 26 Bloomberg Television interview that he knows Ford Chief Financial Officer Don Leclair ``fairly well.'' Mulally said on Bloomberg TV on April 24, the day first- quarter results were released, that he had hadn't been approached by Kerkorian.