Billionaire, Auto Baron Make A Formidable Team Kerkorian, Iacocca Stun Automotive Industry With Bold $22.8 Billion Offer
Multibillionaire Kirk Kerkorian is not as well-known as Lee Iacocca, but their bold bid for Chrysler Corp. bears Kerkorian’s stamp more so than the automaker’s former chairman.
Iacocca built a reputation as the ultimate power executive in the nation’s traditional power industry. As a vice president at Ford in 1964, he introduced the Mustang, one of the most popular cars of all time. After being fired at Ford, he moved to Chrysler and was elevated to celebrity status for rescuing the company from the brink of collapse.
But, it’s Kerkorian who’s known as a dreamer. He’s built the world’s largest hotel in Las Vegas - three times - and now says he wants to buy Chrysler for $22.8 billion.
Not bad for the self-made son of poor Armenian fruit farmers from Fresno, Calif., who dropped out of school during the Depression years to help support his family.
“I’m just a small-town boy who got lucky,” he once said in a rare interview.
He declined comment Wednesday on the Chrysler deal, which stunned the automotive industry. If completed it would be the second-biggest American takeover of all time.
Today the unpretentious gaming and entertainment mogul has a worth of $2.5 billion, according to Forbes Magazine, which ranks him 23rd among the nation’s wealthiest people.
Kerkorian’s privately held Las Vegasbased Tracinda Corp. made the Chrysler bid.
Tracinda is the majority stockholder in MGM Grand, Inc., the parent company for the $1 billion MGM Grand Hotel, Casino and Theme Park here.
The hotel, the world’s largest with 5,005 rooms, opened in December 1993 and helped stimulate a 20 percent increase in Las Vegas tourism in 1994.
Kerkorian, a cargo pilot in World War II, refurbished a small twin-engine plane in the late 1940s and began ferrying passengers between Southern California and Las Vegas. He formed his own airline, selling it to Transamerica Corp. in 1968.
His ambition turned to Hollywood in 1969, when he bought controlling interest in Metro-Goldwyn-Mayer studios. In 1981 he purchased United Artists and merged the two into MGM-UA Entertainment Co. Four years later he sold MGM and the studio’s movie rights to cable TV mogul Ted Turner.
But Kerkorian’s main interest and vision lay in his gamble that Las Vegas represented an enormous long-term business opportunity.
He built the 1,568-room International Hotel in 1968, earning the distinction of the world’s largest hotel at the time. Although medium range by today’s Vegas standards, it represented a major risk at a time when most hotels were in the range of 250 rooms.
“I had total confidence or I wouldn’t have gone into the project,” Kerkorian would say later of the International, now the Las Vegas Hilton. “I’ve always been bullish on Las Vegas.”
He opened the first MGM Grand Hotel on the Las Vegas Strip in 1973, and it was again recognized as the world’s largest, with 2,100 rooms. MGM Grand later added a hotel in Reno and both were sold to Bally Corp. in 1985 for nearly $500 million.
He retained the rights to the MGM Grand name and promised “I’ll be back.”
His latest venture here is a new $350 million, 2,119-room resort across the Strip from the MGM Grand. The resort, named New York-New York, will replicate the New York City skyline. Opening is set for fall 1996. The resort is a joint venture of MGM Grand and Primadonna Resorts.
Perhaps Iacocca steeled his nerves for the bold bid with Kerkorian by dabbling in gambling.
Since leaving Chrysler, he’s invested in a venture trying to develop Indian casino gambling in Michigan, and he sits on the board of MGM Grand Inc., Kerkorian’s casino and entertainment company.
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